Preamble

The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.

Port of London Bill [Lords],

Read the Third time, and passed, with Amendments.

Cleveland and Durham County Electric Power Bill [Lords] (by Order),

Second Reading deferred till Wednesday next, at half-past Seven of the clock.

Southampton Corporation Bill [Lords], (by Order),

Weald Electricity Supply Bill [Lords] (by Order),

Wessex Electricity Bill [Lords] (by Order),

Second Reading deferred till Friday.

NEW WRIT.

For the Borough of Sheffield (Hallam Division), in the room of Major-General Sir Frederick Hugh Sykes, G.B.E., K.C.B., C.M.G. (Chiltern Hundreds).—[Commander Eyres Monsell.]

Oral Answers to Questions — GREAT BRITAIN AND FRANCE (CONVERSATION).

Mr. PONSONBY: 1.
asked the Secretary of State for Foreign Affairs whether he can make any statement regarding his conversations in Paris with the French Foreign Minister?

The SECRETARY of STATE for FOREIGN AFFAIRS (Sir Austen Chamberlain): I had only one conversation with Monsieur Briand, and that was on my way out to Geneva. It was principally occupied with the consideration of some of the questions which were
on the agenda for the Council meeting. The question of disarmament was also touched upon.

Colonel WEDGWOOD: May we take it, therefore, that since the further Note from Mr. Kellogg there has not been any further conversations with the French Government as to whether the reservations originally asked for should be insisted on?

Sir A. CHAMBERLAIN: I am not quite certain that I caught the hon. and gallant Member's question. I think he asked whether he might understand that since the last Note from Mr. Kellogg there had been no further conversations with the French Government. There have been none.

Oral Answers to Questions — PORTUGUESE WEST AFRICA (BRITISH SEAMAN'S ARREST).

Sir ROBERT HAMILTON: 3 and 4.
asked the Secretary of State for Foreign Affairs (1) whether he is aware that, on 17th December last, at Lobito Bay, an officer of the British merchant marine, named Brewer, was arrested by local native officials without any warrant, assaulted by the Portuguese postmaster, and kept four and a half months without trial, during which he has been suffering from malaria; and what steps has His Majesty's Government taken in the matter;
(2) whether His Majesty's Government possesses a full-time Consul at Loanda; and whether he will favourably consider instructing this Consul to render all possible assistance to the British merchant marine officer, named Brewer, who has been arrested without warrant or trial at Lobito Bay, in Portuguese West Africa?

Sir A CHAMBERLAIN: His Majesty's Consul-General at Loanda, a full-time salaried officer, was at Lobito when Mr. Brewer was arrested, and he immediately reported to me. He at once took all steps possible to secure Mr. Brewer's comfort during his detention, and I understand that Mr. Brewer has no complaint as regards his accommodation. His Majesty's Government are watching the case carefully and have instructed His Majesty's Consul-General to attend the trial when it takes place and meanwhile to take any opportunity
which offers to expedite a hearing, if he can do so without prejudice to the interests of the accused.

Captain GARRO-JONES: Is it true that this man was kept for four and a half months without trial; and, if not, has the right hon. Gentleman made any representations to the Government concerned in the matter?

Sir A. CHAMBERLAIN: If it was not true, I do not see on what ground representations could be made. I have told the House that the Consul-General has been asked to take any opportunity to expedite the trial if he can do so without injury to the interests of the accused.

Lieut.-Commander KENWORTHY: Has the right hon. Gentleman made any representations on the matter to the Portuguese Minister in London? Does he not consider it very important to see that a British seaman is not treated in this way in a Portuguese Colony?

Sir A. CHAMBERLAIN: No, Sir, I have made no representations to the Ambassador. I should have done so if I had thought that it would serve the course of justice or the protection of the citizen.

Oral Answers to Questions — CHINA.

POSTAL ADMINISTRATION.

Mr. LOOKER: 5.
asked the Secretary of State for Foreign Affairs whether his attention has been drawn to the proposals of the Chinese to make changes in the postal administration involving a curtailment of the powers of the foreign co-director-general and the reduction of the foreign staff; and whether, in view of the undertaking given by China when the foreign post offices were withdrawn that she would not change the status of the foreign co-director-general or otherwise interfere with the maintenance of the foreign control which existed in 1922, he will say what action he proposes to take?

Sir A. CHAMBERLAIN: On the 6th February last an agreement was concluded between the Ministries of Communications at Peking and Nanking for the joint operation of the Northern and Southern sections of the postal administration under two Chinese Directors-General at Peking and Nanking respectively,
involving some curtailment of the powers of the French co-Director-General. Protests were lodged by the Diplomatic Body with the Northern and Southern authorities against this breach of the assurance given by China at Washington in 1922 that the Chinese Government contemplated no change in the postal administration so far as the status of the foreign co-Director-General was concerned. I am not aware what proposals, if any, have been made for the reduction of the foreign staff. As a result of recent developments in China, it is now proposed that the post of Director-General at Peking shall be abolished, and that postal affairs shall be controlled by the Director-General at Nanking, involving the transfer of the administration thither. The situation is being closely watched by the interested foreign representatives in Peking.

Mr. LOOKER: Has any reply been received from the authorities to the protests made by the Powers?

Sir A. CHAMBERLAIN: Perhaps I ought to have provided myself with that information. I should be glad if my hon. Friend would put a further question to me.

SALT GABELLE.

Mr. LOOKER: 6.
asked the Secretary of State for Foreign Affairs if he is in a position to make any statement as to the present position of the salt gabelle in China and as to any changes carried out, or proposed to be carried out, by the Chinese, in breach of international obligations entered into by China relating to the gabelle?

Sir A. CHAMBERLAIN: Orders have been issued by the Nanking Salt Administration to the District Inspectors at Tientsin and at Chefoo directing that, as from the 3rd of June, all payments issuable by those officers should be temporarily stopped, and that all funds collected should be temporarily deposited with various Chinese banks, to be taken over by an officer appointed by Nanking. The order added that the officers in charge of the District Inspectorates would be held responsible if any funds were disposed of contrary to these instructions. These orders entirely ignore the authority of the foreign Associate Chief Inspector, and are in complete disregard of the procedure laid down in the
Reorganisation Loan Agreement for the fulfilment of the obligations secured on the salt revenues. His Majesty's Minister at Peking has conveyed a warning to the Minister for Foreign Affairs at Nanking of the irregularity of this action, and discussions between the Associate Chief Inspector and the Nanking authorities are proceeding.

Mr. LOOKER: Has the right hon. Gentleman's attention been drawn to the assurance published by the Nanking Government on the 17th of this month to the effect that it would not disregard any national responsibility in connection with agreements and understandings properly and legally entered into; and is it not the fact that these obligations as regards the salt gabelle are precisely the same as those obligations which it stated it would not disregard?

Sir A. CHAMBERLAIN: I have seen the declaration. It is not in the exact terms which my hon. Friend quoted. This is, unfortunately, of some importance, and I am not at all satisfied with the attitude of the Nanking Government on this question.

Mr. L'ESTRANGE MALONE: Could we not regularise this question better by dealing direct with Nanking rather than through Peking?

SHANGHAI PROVISIONAL COURT (PRESIDENT).

Mr. LOOKER: 7.
asked the Secretary of State for Foreign Affairs whether he is aware that the President of the Provisional Court of Shanghai has been dismissed; that a new President, 23 years of age and with no legal experience, has been appointed in his place; that such appointment is a violation of the agreement under which the Mixed Court was returned to the Chinese; and can he state what action he proposes to take?

Sir A. CHAMBERLAIN: On the 15th of June the Commissioner for Foreign Affairs at Shanghai notified the senior Consul that the Kiangsu Provincial Government had instructed the President of the Provisional Court to hand over the duties of his office to a new appointee who is a graduate of the Universities of Soochow and Michigan. The dismissal of the President is being opposed by the
Consular Body as being a violation of the assurance, annexed to the Rendition Agreement, that the Judges will enjoy the immunities and securities of tenure provided for by Chinese law. The matter is now under discussion between the Commissioner for Foreign Affairs and the Consuls-General for the United States, Japan, the Netherlands and Great Britain.

Mr. LOOKER: Will the right hon. Gentleman represent to the Chinese authorities that an appointment of this nature would destroy all public confidence in the good faith of the Chinese administration?

Sir A. CHAMBERLAIN: I think the representations that are necessary have already been made by His Majesty's Minister, or are in course of being made by the Consuls-General of the Powers.

Mr. HASLAM: Has the change actually taken place, or is it only contemplated?

Sir A. CHAMBERLAIN: I cannot say whether the duties have actually been handed over or not, but orders were issued to the President of the Court to hand over to a new appointee, who is named.

CAPITAL.

Lieut.-Commander KENWORTHY: 8.
asked the Secretary of State for Foreign Affairs whether His Majesty has a representative at Nanking; and whether he has any information as to the proposed change of the capital of China from Pekin to Nanking?

Sir A. CHAMBERLAIN: His Majesty's Consul-General for Nanking is temporarily resident at Shanghai, owing to the fact that the Consulate-General has not yet been restored to a habitable condition since being looted and occupied by Nationalist troops; but he visits the former city from time to time whenever necessary. At a recent interview the representative of Dr. C. T. Wang, the Minister for Foreign Affairs, informed His Majesty's Minister that there was a sharp divergence of opinion in Nationalist circles regarding the transfer of the capital, and that the question would be discussed at a plenary session of the Political Council to be held in the middle of July.

Lieut.-Commander KENWORTHY: In view of the great importance of His Majesty's Government being represented at Nanking, would it not be possible to accommodate the Consul-General on board a ship?

Sir A. CHAMBERLAIN: No, Sir, I am not prepared to ask His Majesty's Consul-General to take up his quarters there on board a ship. The proper thing is for the Chinese authorities to restore the Consulate-General and to make good the damage they have inflicted.

Lieut.-Commander KENWORTHY: Rut in the meantime who is looking after the very extensive British interests in Nanking?

Sir A. CHAMBERLAIN: The Consul-General, in the manner which I have already described.

Mr. ERNEST BROWN: Will the right hon. Gentleman take care to make the hon. and gallant Member for Central Hull (Lieut.-Commander Kenworthy) captain of that ship?

Lieut.-Commander KENWORTHY: May I say that I should be very glad to assist His Majesty's Government in any way?

MANCHURIA (BRITISH INTERESTS).

Lieut.-Commander KENWORTHY: 9.
asked the Secretary of State for Foreign Affairs what is the general political situation in Manchuria; and what steps are being taken to safeguard British commercial rights in the province?

Sir A. CHAMBERLAIN: On the 20th of June, Marshal Chang Tso-lin's son, Chan Hsuch-liang, took over the post of chief military commander at Mukden, and Chang Tso-lin died at midnight on the 21st of June. Apart from this there has been no change in the political situation in Manchuria. I am not aware of any threat to British commercial interests in that province, but developments there are being closely watched.

Lieut.-Commander KENWORTHY: Is the Foreign Secretary satisfied that British trade will go on normally? We have a very important trade in Manchuria.

Sir A. CHAMBERLAIN: No, Sir. I am not satisfied that British trade or
any other trade will go on normally in any part of China owing to the disturbed conditions.

Lieut.-Commander KENWORTHY: Is the right hon. Gentleman not aware that a very considerable trade is being carried on with many parts of China, and it is a very valuable trade?

Sir A. CHAMBERLAIN: I am well aware of that fact, but that is not the same thing as saying that trade in China is being conducted normally.

BRITISH TROOPS.

Mr. NOEL BUXTON: 34.
asked the Secretary of State for War the strength of the British troops forming the Shanghai defence force; what withdrawals have taken place since last September; and whether further withdrawals are contemplated, aiming at a progressive reduction of the total strength of the expeditionary force?

The SECRETARY of STATE for WAR (Sir Laming Worthington-Evans): In addition to the normal establishment of three battalions, there are now in China 7 infantry battalions, together with ancillary troops. Since 1st September last a Marine battalion and 5 infantry battalions with ancillary troops have been withdrawn. Further withdrawals must depend on the political situation.

Mr. BUXTON: Can the withdrawal be accelerated, in view of the improved conditions in China recently?

Sir L. WORTHINGTON-EVANS: I think it is a little optimistic to say that they are improved yet, but I hope that they will be improved, and that we shall be able to withdraw our troops.

Captain GARRO-JONES: In view of the fact that this is one of the few things under the sun for which the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) cannot be blamed, may I ask at whose expense these troops are being maintained, seeing that the matter is now one of the protection of property rather than the protection of British lives?

Sir L. WORTHINGTON-EVANS: I cannot agree with that statement. The troops are there for the protection of our nationals.

Mr. MALONE: Did not the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) approve of their despatch?

Oral Answers to Questions — PASSPORTS.

Mr. DAY: 10.
asked the Secretary of State for Foreign Affairs whether he can state the number of passports issued either to women or girls for the 12 months ended to the last convenient date; and the number of these persons who applied for passports for the purpose of taking up theatrical engagements abroad.

Sir A. CHAMBERLAIN: The information desired by the hon. Member is not readily available and could only be compiled by considerable labour which I do not think would be justified. A separate record of the number applying in order to take up theatrical engagements is now being kept, but has only been in existence for a month, and the figures for a month would, I think, be of no use.

Mr. DAY: What control is exercised by the Foreign Office?

Sir A. CHAMBERLAIN: Great care is taken by the various authorities concerned with the help of the societies connected with the dramatic profession in this country to see that young women are not allowed to go abroad unless there is a real prospect of suitable employment. I have answered that question before, and I refer the hon. Member to the answer which I then gave.

Oral Answers to Questions — RHINELAND (EVACUATION).

Mr. BUXTON: 11.
asked the Secretary of State for Foreign Affairs if, in view of the Polish Foreign minister's recent declaration that future guarantees must be negotiated before the Rhineland is evacuated, he will give an assurance that His Majesty's Government does not contemplate the grant of further guarantees to the government of Poland in connection with the evacuation of the Rhine-land.

Sir A. CHAMBERLAIN: His Majesty's Government have repeatedly stated that this country cannot give further guarantees or increase the obligations which it has taken by the Covenant of the League and the Treaty of Locarno.

Mr. BUXTON: May we understand then that the Government have a perfectly free hand in regard to the evacuation of the Rhineland?

Sir A. CHAMBERLAIN: Yes, Sir. Obviously, it would be a matter for joint co-operation arising out of the Treaty of Versailles, but we are under no obligation to any country.

Mr. BUXTON: Are any negotiations in progress with regard to evacuation?

Sir A. CHAMBERLAIN: No, Sir.

Captain GARRO-JONES: If the right hon. Getleman has a free hand, does he not think that, after 10 years, it is time that Great Britain withdrew her troops?

Sir A. CHAMBERLAIN: Perhaps the hon. and gallant Member will consult with his leader as to why he put a period of 15 years in the Treaty.

Lieut.-Commander KENWORTHY: Was not the Foreign Secretary a member of the Cabinet at that time?

Sir A. CHAMBERLAIN: Yes, but my right hon. Friend is a better authority on the authorship of the Treaty.

Oral Answers to Questions — GOVERNMENT DEPARTMENTS.

ADMIRALITY (COMBINED POSTS).

Mr. HASLAM: 12.
asked the First Lord of the Admiralty whether he has combined the posts of director of training and sports and director of the naval personnel committee; and, if so, what saving of expenditure is realised by the change?

The PARLIAMENTARY SECRETARY to the ADMIRALTY (Lieut.-Colonel Headlam): These posts have been combined to date 14th August, 1928, and a saving of £1,500 a year approximately is anticipated.

FOREIGN PURCHASES.

Mr. RAMSDEN: 13.
asked the First Lord of the Admiralty if he will state the value of any foreign goods purchased during the last financial year by or on behalf of hit Department; and what percentage this bears to the total purchases?

Lieut.-Colonel HEADLAM: If my hon. Friend will allow me, I will quote the amount for the calendar year 1927 which is more readily ascertainable. This is
approximately £205,000 (excluding Petroleum Products), being a little over 1 per cent. of the total purchases.

Mr. RAMSDEN: 27.
asked the Secretary of State for Air the value of any foreign goods purchased during the last financial year by or on behalf of his Department; and what percentage this bears to the total purchases?

The SECRETARY of STATE for AIR (Sir Samuel Hoare): Exclusive of petrol and oil, which are almost entirely of foreign origin, the total value of Air Ministry headquarter contracts for foreign goods in the financial year 1927–28 was approximately £54,000, or 0.8 per cent. of the total. Similar information is not available in regard to purchases made by other Government Departments on behalf of the Air Ministry, and could not be obtained in regard to local purchases at Air Force stations at home and abroad without considerable correspondence and labour.

Mr. RAMSDEN: 29.
asked the Under-Secretary of State for the Home Department, as representing the First Commissioner of Works the value of any foreign goods purchased during the last financial year for or on behalf of that Department; and what percentage this bears to the whole?

The UNDER-SECRETARY of STATE for the HOME DEPARTMENT (Lieut.-Colonel Sir Vivian Henderson): Approximately £18,000 was spent on foreign goods, representing less than 1 per cent. of the total expenditure by the Office of Works.

Mr. W. THORNE: May I ask the Financial Secretary to the Treasury whether, in view of the questions which are being put to various Departments on this subject, he can see his way to publishing a Paper giving the amounts of the foreign purchases in the case of all Departments?

Sir V. HENDERSON: Perhaps the hon. Member had better put down a question with regard to that matter.

Mr. DAY: Can the hon. and gallant Gentleman say what was the nature of these purchases?

Sir V. HENDERSON: I could not give details without notice.

Oral Answers to Questions — ROYAL NAVY.

HARBOUR MASTER, ORKNEY.

Sir R. HAMILTON: 14.
asked the First Lord of the Admiralty whether a fresh appointment has been made to the office of King's Harbour Master in Orkney; and whether he will state what are the duties and emoluments of the office?

Lieut.-Colonel HEADLAM: Yes; the duties of this officer are the same as those of his predecessor. It is considered undesirable in the interests of the Admiralty to abolish this appointment at present. The emoluments of the present King's Harbour Master are £789 10s. per annum.

Sir R. HAMILTON: Is the Parliamentary Secretary aware that the First Lord told me two years ago that he would consider the abolition of this post? I have waited until this new appointment has been made in succession to the old one, and I want to know if any consideration has been given to the question as to whether this post will be abolished or not.

Lieut.-Colonel HEADLAM: I am certain that full consideration has been given to this matter, but the contract for the salving of the sunken German warships provided for Admiralty supervision or observation of the work to ensure that the provisions of the contract are complied with. There are two ships still to be raised.

Sir R. HAMILTON: Is it necessary to pay an officer £789 a year to do this work?

Lieut.-Colonel HEADLAM: We should not do it unless we considered it necessary.

Sir BERTRAM FALLE: Was this officer an Orkney-born man?

Lieut.-Colonel HEADLAM: I must have notice of that question.

Mr. HARRIS: What were the duties of this officer's predecessor?

Lieut.-Colonel HEADLAM: The same.

Mr. HARRIS: What were the actual duties of the present harbour master's predecessor?

PRIZE FUND (FOREIGN CLAIMS).

Lieut.-Commander KENWORTHY: 15.
asked the First Lord of the Admiralty what outstanding claims there are by foreign nationals against the Prize Fund; what is the amount of such claims; and what is the nationality of the claimants?

Lieut.-Colonel HEADLAM: There are several outstanding claims of the kind referred to by the hon. and gallant Member, but I regret that it is not desirable to give details.

Lieut.-Commander KENWORTHY: May we be told the nationality of the claimants?

Lieut.-Colonel HEADLAM: I think it would be undesirable to give that information at the present time.

Lieut.-Commander KENWORTHY: How can we possibly discuss this very important question without this information?

Lieut.-Colonel HEADLAM: It will be better to wait until the proper time arrives.

MATES (PROMOTION).

Sir B. FALLE: 16.
asked the First Lord of the Admiralty the number of mates with seniority after 1st January, 1920, who, as the result of obtaining all first-class certificates, have been promoted to lieutenants in the minimum period allowed by the Regulations?

Lieut.-Colonel HEADLAM: The number is one.

Sir B. FALLE: 17.
asked the First Lord of the Admiralty how many lieutenants promoted from mate have been selected to specialise in gunnery, torpedo, navigation, anti-submarine, signals, W/T, and the staff course, since the provisions of A.F.O. 1095/1926?

Lieut.-Colonel HEADLAM: No officers promoted from mate have been selected to specialise in these subjects since the issue of Admiralty Fleet Order 1095/26.

Sir B. FALLE: Can the Parliamentary Secretary give any reason for that?

Lieut.-Colonel HEADLAM: I can tell the hon. Member that two officers who were promoted from mate have been selected to specialise in submarines by
that Fleet Order, and one more officer will do so in the next course.

Commander BELLAIRS: Are the Admiralty satisfied with these quite inadequate promotions from the lower deck?

Lieut.-Colonel HEADLAM: I do not know that there is any reason for dissatisfaction. We are doing what we said we would do, and we are doing it as speedily as possible.

Mr. HORE-BELISHA: Does the Parliamentary Secretary say that there is-no reason for dissatisfaction in view of the fact that only one mate has been promoted to lieutenant in the last two years?

Lieut.-Colonel HEADLAM: I have no reason to suppose that there is any dis-satisfaction.

Sir B. FALLE: 18.
asked the First Lord of the Admiralty the number of lieu-tenant-conmanders and lieutenants promoted from the rank of mate; the number of mates there are now serving on the active list; and the number of these officers placed on the retired list during the year 1927?

Lieut.-Colonel HEADLAM: The number of lieutenant-commanders and lieutenants who have been promoted from the rank of mate is 341, of whom 94 still remain on the active list. Twenty-one mates, of whom seven are acting mates, are now on the active list. Nineteen officers promoted from mate were placed on the retired list during the year 1927.

Mr. HORE-BELISHA: Can the Parliamentary Secretary say how many of these were war promotions?

Lieut.-Colonel HEADLAM: Not without notice.

Lieut.-Commander KENWORTHY: Does that not show that the system of promoting men from the lower deck to take commissions is gradually dying out?

Lieut.-Colonel HEADLAM: No, Sir.

CANTEENS (MANAGEMENT).

Mr. HORE-BELISHA: 19.
asked the First Lord of the Admiralty whether he is yet in a position to state what decision has been reached with reference to the resolution passed at the Head-quarters
Naval Canteen Committee regarding the placing of all canteens under the management of the Navy, Army and Air Force Institutes?

Lieut.-Colonel HEADLAM: A decision is expected to be communicated at an early date.

HIS MAJESTY'S SHIP "REVENGE" (REFITTING).

Mr. HORE-BELSHA: 20.
asked the First Lord of the Admiralty what will be the cost of refitting His Majesty's Ship "Revenge," now undergoing refit in Devonport Dockyard; and how much of the total sum will be earmarked for labour?

Lieut.-Colonel HEADLAM: If the hon. Member will refer to page 351 of the current Navy Estimates, he will see that the estimated total cost of refitting the "Revenge" is as follows:



£


Total cost
351,086


Sum earmarked for dockyard labour
185,000

Mr. HORE-BELISHA: Does that hold good? Was that not a provisional calculation?

Lieut.-Colonel HEADLAM: Of course, it holds good.

LOCAL RATES.

Mr. HORE-BELISHA: 21.
asked the First Lord of the Admiralty whether he will set out details in respect of £375,000 appearing in the Navy Estimates in respect of rates on Government property; and whether this sum is taken account of in estimating costs of maintenance and production?

Lieut.-Colonel HEADLAM: With the hon. Member's permission, I will circulate in the OFFICIAL REPORT particulars of the sum of £375,000 in respect of contributions in lieu of rates on naval establishments. The appropriate amounts are taken into consideration in estimating costs of maintenance and production.

Sir B. FALLE: May I ask why the nation should pay these rates to itself, especially as this amount would exactly pay for the marriage allowances for which we are all pressing?

Lieut.-Colonel HEADLAM: That is hardly a question to be put to me.

Mr. HORE-BELISHA: Have the Admiralty consulted with the Chancellor of the Exchequer as to the effect of the new rating proposals of the Government on this system, seeing that the Government are themselves ratepayers and will presumably get relief?

Lieut.-Colonel HEADLAM: We shall continue to carry out the same system, and the relief that we get will be calculated in our Estimates.

Mr. MALONE: Are we to understand that the dockyards will receive relief under the new rating proposals?

Lieut.-Colonel HEADLAM: That is a question of which I must have notice.

Following are the particulars:



£


Admiralty offices
25,000


Dockyards, naval barracks, armament establishments, store depots and attached establishments
281,000


Victualling yards
20,000


Marine barracks
13,500


Medical establishments
18,500


Shore signal stations, etc.
2,000


Scientific services
2,500


Educational establishments
12,500

Oral Answers to Questions — UNEMPLOYMENT.

COURT OF REFEREES, WEST BROMWICH.

Mr. WELLOCK: 24.
asked the Minister of Labour the number of sittings of the West Bromwich Court of Referees since 19th April, the total number of appeals considered, and the number disallowed?

The MINISTER of LABOUR (Sir Arthur Steel-Maitland): West Bromwich is a new Court area. The first Court was held in the area on the 1st June. Up to the 21st June nine sittings have been held in the area, at which 186 appeals were considered; of these 143 were disallowed.

ROAD SCHEME, GRIMSBY.

Mr. GOSLING: 37.
asked the Minister of Transport whether, in view of the increase in the number of unemployed in the county borough of Grimsby and district, covering areas controlled by the Grimsby Rural Council and the Cleethorpes Urban District Council, he will inquire into the causes which are at
present holding up a new suburban road scheme in the above areas, which would absorb a considerable amount of labour?

The MINISTER of TRANSPORT (Colonel Ashley): If the hon. Member's question relates to the widening and reconstruction of Peaks Lane, I am glad to say that the notification of a grant to this work was issued to the Grimsby Rural District Council on 16th June.

Oral Answers to Questions — COST OF LIVING (INDEX FIGURE).

Mr. FENBY: 25.
asked the Minister of Labour whether, with the information already secured to date from the new valuation lists in the various assessment areas as to the average rent now being paid by the working classes, he can review the situation in order that the cost-of-living figure may be revised before it is next determined?

Sir A. STEEL-MAITLAND: The information which is becoming available locally in connection with the new valuation lists will not for some time to come be sufficiently comprehensive to justify its use for the present purpose. I am glad to have this opportunity of correcting a misapprehension as to the immediate availability of this information which may have arisen from the answer I gave the hon. Member on 13th June.

Oral Answers to Questions — ROYAL AIR FORCE (PROMOTION).

Sir NICHOLAS GRATTAN-DOYLE: 28.
asked the Secretary of State for Air the nature of the changes involved in recent Air Force Orders affecting the recruitment of officers for the Royal Air Force; and upon what advice the changes have been made?

Sir S. HOARE: As regards the first part of the question, I am sending my hon. Friend a copy of a memorandum which has been reproduced in the Order to which he refers, and in which such changes as have been made, and the reasons for them, are fully explained for the information of the Royal Air Force. As regards the second part, the object of the scheme set forth in the Order is to provide a more assured career and improved prospects of promotion for officers and non-commissioned officers without additional expenditure, and it is the
result of a complete and detailed investigation of all the factors involved in the light of the experience of the past 10 years.

Oral Answers to Questions — POST OFFICE (LETTER DELIVERIES).

Mr. LAMB: 31.
asked the Postmaster-General whether it is the aim of his Department to give a delivery of letters at least once on each weekday to every house in England and Wales; to what extent his Department at the present time has failed to give such daily delivery; and the additional cost which would be incurred if such daily delivery were given generally?

The POSTMASTER-GENERAL (Sir William Mitchell-Thomson): I cannot say that the first part of my hon. Friend's question can be answered by an unqualified affirmative, for, ever since regular deliveries were first instituted in 1897, it has always been recognised that there are isolated places in various parts of the country where a delivery every weekday could not be given except at wholly inordinate expense. A special and costly return would be necessary to enable me to furnish the information asked for in the second part of the question; but I shall be glad to make inquiry about any particular locality which my hon. Friend may have in mind.

Mr. R. MORRISON: Can the right hon. Gentleman say what is the longest time that elapses between deliveries in any part of the Kingdom?

Sir W. MITCHELL-THOMSON: I could not say without notice.

Sir R. HAMILTON: Will the right hon. Gentleman make it his aim to restore the deliveries that were in existence before the War? We do not ask for more than that at the present moment.

Mr. LAMB: Is it not correct to say that there are large areas which only receive a post twice a week?

Sir W. MITCHELL-THOMSON: No, Sir; I think that that would be an incorrect statement. There are large isolated localities in various parts of the country where that is true, but they are only in outlying districts, and in those
parts the amount of correspondence carried is almost insignificant.

Mr. LAMB: In view of the increased transport facilities, is it not true to say that places which were previously-isolated would not now be considered to be so by any other Department?

Sir W. MITCHELL-THOMSON: I do not think that that is so.

Sir R. HAMILTON: Will the right hon. Gentleman cease to consider his Department as purely a money-making Department for the Chancellor of the Exchequer?

Oral Answers to Questions — AGRICULTURAL RATES.

Mr. RILEY: 33.
asked the Minister of Health what would have been the approximate amount payable to local rates for agriculture and buildings in England and Wales for the year 1926–27 if the Agricultural Rates Acts of 1896 and 1923 had not been operative?

The PARLIAMENTARY SECRETARY to the MINISTRY of HEALTH (Sir Kingsley Wood): The amount of local rates, to which the Agricultural Rates Acts, 1896 and 1923, apply, which would have been payable in respect of agricultural land in England and Wales for the year 1926–27 if these Acts had not been operative, is estimated at £12,460,000. The Agricultural Rates Acts do not apply to buildings.

Mr. RILEY: Does the figure that the right hon. Gentleman has now given correspond with his previous statements in this House?

Sir K. WOOD: I hope so.

Mr. EVERARD: Could the right hon. Gentleman say how much the aggregate rates on agricultural buildings come to?

Sir K. WOOD: I should have to have notice of that question.

Oral Answers to Questions — OFFICERS' TRAINING AND CADET CORPS.

Mr. R. RICHARDSON: 35.
asked the Secretary of State for War what is the strength of officers' training corps and of cadet corps in connection with secondary
and public schools, and the age at which pupils are enrolled to membership of these corps?

Sir L. WORTHINGTON-EVANS: On the latest dates for which figures are available, the numbers of cadets in the junior division of the officers' training corps and the cadet corps were 34,085 and 49,841, respectively. Of these numbers, all cadets of the junior officers' training corps and 9,302 cadets of the cadet corps belonged to contingents furnished by public or secondary schools. The minimum ages at which boys are permitted to join the junior division of the officers' training corps and the cadet corps are 13 and 12 respectively.

Mr. RICHARDSON: Does the right hon. Gentleman mean to tell the House that boys 13 years of age are enrolled to be trained as officers?

Sir L. WORTHINGTON-EVANS: They are being trained in the junior officers' training corps.

Mr. RICHARDSON: 36.
asked the Secretary of State for War what amount of public money is paid by the War Office, or other Departments, towards assisting officers' training corps and cadets corps; under what conditions is this money, if any, paid; is it paid direct to local authorities or to the governors of individual schools; and is the payment confined to schools recognised as efficient by the Board of Education?

Sir L. WORTHINGTON-EVANS: The amounts included in Army Estimates, 1928, for the payment of grants to the junior division of the officers' training corps and the cadet corps are £37,700 and £10,250, respectively. The above amounts exclude assistance in kind such as the loan of camp equipment, etc. I am not aware that any payment is made to these corps by other Government Departments. Payment of the grants is made in the case of cadet corps to Territorial Army Associations, and in that of the junior division of the officers' training corps to the officer commanding the contingent. The conditions of such payment are laid down in the Regulations, from which I am sending the hon. Member the relevant extracts. He will also find much useful information on pages 60 to 63 of Army Estimates. The answer to the last part of the question is in the negative.

Mr. THURTLE: Does the right hon. Gentleman think the expenditure of public money on training boys of 12 to be soldiers is in keeping with the lip service the Government pay to the cause of peace?

Mr. SPEAKER: That question does not arise.

Oral Answers to Questions — KENYA (NATIVE LAND TRUST BILL).

Mr. AMMON: 40.
asked the Secretary of State for the Colonies whether the Kenya Native Land Trust Bill makes provision for the inclusion as beneficially occupied land of land under cultivation and fallow land, grazing land, and land left idle after grazing; and whether all land not so occupied will be available for leasing to Europeans?

Mr. MORGAN JONES: 41.
asked the Secretary for the Colonies whether the appointment of non-official Europeans to the Central Board under the Kenya Native Land Trust Bill will be submitted to him for approval; and whether he can make any statement as to the kind of qualifications which will be taken into account in the selection of these gentlemen?

The SECRETARY of STATE for the COLONIES (Mr. Amery): I would refer the hon. Members to the reply which I gave to a question by the hon. Member for Finsbury (Mr. Gillett) on 21st June.

Colonel WEDGWOOD: Are we to understand that this Native Land Trust Bill which is passing through the Kenya Assembly is one to take land from the natives and not to secure the natives in the land which they have, and will the right hon. Gentleman inquire why the nature of this legislation has been completely changed from what was intended by the Colonial Office?

Mr. AMERY: The answer to the first part of the question is in the negative and the second, therefore, does not arise.

Lieut.-Commander KENWORTHY: Has the right hon. Gentleman's attention been called to the speech of the Governor of Kenya in which his Department is attacked by the Governor for holding up this legislation?

Mr. AMERY: I have seen the telegraphed report of the speech, but I cannot accept the hon. Member's description of it as an attack.

Lieut.-Commander KENWORTHY: Since the right hon. Gentleman answered the previous question on the matter, has he looked up what happened to Ahab when he took Naboth's vineyard?

Oral Answers to Questions — KING IBN SAUD (CONVERSATIONS).

Mr. MALONE: 42.
asked the Secretary of State for the Colonies what outstanding questions are under discussion with King Ibn Saud; when conversations are going to be resumed; and whether the Government of Iraq, Palestine, and Transjordania, and the French authorities in Syria, have been kept informed of the course of the negotiations?

Mr. AMERY: I am not in a position to add anything to the reply given to the hon. Member and the hon. Member for Norfolk, North (Mr. Buxton) on 13th June.

Mr. MALONE: Is it a fact that a bomb raid was arranged on the Imam Ibn Saud yesterday, and does the right hon. Gentleman think that is the best way of coming to a satisfactory settlement in Arabia?

Mr. AMERY: The Imam is not the same person as Ibn Saud, and there is no connection between the two questions.

Oral Answers to Questions — OTTOMAN LOAN.

Mr. COUPER: 43.
asked the Secretary of State for the Colonies whether the tribute formerly paid by Cyprus out of its revenue towards the payment of interest on the Ottoman Loan continues to be levied; and, if not, to what purpose is the revenue now applied?

Mr. AMERY: The Cyprus contribution towards the Ottoman Public Debt charge, amounting to £92,800 a year and formerly known as the "tribute," is still paid. I may add however, that by an arrangement which came into force at the beginning of this year, His Majesty's Government has increased the grant-in-aid to Cyprus from the former figure of £50,000 a year to £92,800 a year, the full amount of the contribution, while the island contributes £10,000 a year towards the cost of Imperial defence. The con-
sequent net saving of £32,800 a year to the Cyprus Exchequer is being devoted to improvements in the administration and to general development.

Colonel WEDGWOOD: Are we to understand that the taxpayers of this country pay the whole of that £92,000 interest on the Turkish debt and the interest on these bonds?

Mr. AMERY: Yes, Sir.

Colonel WEDGWOOD: Is that system to endure for ever, that we are to pay the interest on the Ottoman Loan, which was guaranteed jointly by France and England?

Mr. AMERY: It will not endure for ever. This amount includes amortisation.

Oral Answers to Questions — EMPIRE SETTLEMENT.

Mr. HASLAM: 44.
asked the Secretary of State for Dominion Affairs whether he will give particulars of the scheme whereby a limited number of military and naval families will be offered facilities to settle on farms in Canada during the spring of 1929?

Mr. AMERY: Full particulars of this scheme are given in a memorandum issued by the War Office and in an Admiralty Fleet Order, copies of which I am forwarding to the hon. Member.

Mr. THURTLE: What are we to understand by the term "military and naval families" used in this question?

Mr. AMERY: It does not imply anything militaristic about the families.

Oral Answers to Questions — COLONIAL GOVERNORS (DIRECTORSHIPS).

Mr. WALTER BAKER: 46.
asked the Prime Minister whether, on appointment, a Colonial Governor is required to relinquish any directorships which he may hold?

Mr. AMERY: I have been asked to reply to this question. Yes, Sir.

Oral Answers to Questions — EMPIRE MARKETING BOARD.

Sir. N. GRATTAN-DOYLE: 47.
asked the Secretary of State for Dominion
Affairs what has been the expenditure of the Empire Marketing Board to date on publicity and propaganda in respect of Empire products and home products, respectively?

Mr. AMERY: The expenditure incurred from the Empire Marketing Fund on publicity and propaganda from the commencement of the Board's work up to 31st March, 1928, amounts to £296,189 16s. 6d. No specific allocation is made for the advertising of produce from any individual country. The Board's policy is to create a general demand for Empire produce, including the produce of this country, and any apportionment of publicity expenditure on a territorial basis is therefore impossible.

Mr. HARRIS: Who decides what subjects should be advertised and what posters should be displayed?

Mr. AMERY: The Board is advised by a committee containing a number of eminent business men. The names of the committee are to be found in the Annual Report.

Mr. HARRIS: Are any farmers represented on the committee?

Mr. AMERY: Yes. British agriculture is represented.

Mr. RILEY: Is there any evidence of any substantial increase in Empire trade as a result of the expenditure on advertising?

Mr. AMERY: I think there is every evidence that there has been a large increase in the purchase of Empire produce.

Mr. HARDIE: Has there been any reduction, as far as the consumer is concerned, due to the money spent in advertising?

Mr. AMERY: I think the consumer has got better quality, and an increase of Empire production tends to a reduction in cost.

Mr. HARDIE: Is the right hon. Gentleman not aware that all the goods advertised are sold at the very same price as other goods which do not come from the Empire, and who is taking the profit?

Mr. AMERY: I am not aware of that fact, but it does not preclude increased Empire production contributing to a reduction of price.

Mr. HARDIE: How can the right hon. Gentleman say that when he cannot show a single reduction? I challenge him to show a reduction on any article.

Sir N. GRATTAN-DOYLE: 48.
asked the Secretary of State for Dominion Affairs the total annual amount of the salaries of the staff of the Empire Marketing Board?

Mr. AMERY: For the financial year 1923 provision of a sum of £29,070 has been made in the Estimates of the Dominions Office for the salaries of the staff of the Empire Marketing Board. A further sum of £3,500 has been provided in the same Vote for additional assistance which may become necessary in the course of the financial year either on the staff of the Board or the Imperial Economic Committee. The cost of the staff in question will be recovered from the Empire Marketing Fund.

Oral Answers to Questions — IMPERIAL WIRELESS AND CABLE CONFERENCE.

Mr. DAY: 45.
asked the Prime Minister whether a Report from the Imperial Wireless and Cable Conference has now been received?

The PRIME MINISTER (Mr. Baldwin): No, Sir.

Mr. DAY: Can the right hon. Gentlemen say when he hopes to get the report?

The PRIME MINISTER: I am afraid not, but I hope it will not be very long.

Mr. DAY: Can the right hon. Gentleman facilitate it?

Oral Answers to Questions — INCOME TAX LAW.

Mr. DAY: 38.
asked the Chancellor of the Exchequer whether he is aware that under Section 165, paragraph (1), of The Income Tax Act, 1918, it is possible for a person to be committed to prison indefinitely by the General Commissioners without his case being heard either by a magistrate or recorder; and can he see his way to amending the Law in this respect?

The FINANCIAL SECRETARY to the TREASURY (Mr. Arthur Michael Samuel): The hon. Member has drawn
attention to the survival in the Income Tax law of a power which has been obsolete for many years. As he is aware, a Committee is at present engaged on the task of redrafting the law, and, pending the legislation which will follow their report, I think it is better not to attempt to remove the dead wood piecemeal.

Mr. DAY: Have these officials the power to arrest anyone for non-payment of tax?

Mr. SAMUEL: The power exists under Section 165 of the Income Tax Act, 1918, but is obsolete and is not put into effect.

Mr. DAY: Do I understand this power has not been exercised during the last few years at all?

Mr. SAMUEL: That is so.

Mr. DAY: If I send the hon. Gentleman particulars of two cases, will he investigate them?

Mr. SAMUEL: Willingly.

Oral Answers to Questions — MESTON COMMITTEE (REPORT).

Mr. R. RICHARDSON: 39.
asked the Financial Secretary to the Treasury, if he will publish the evidence submitted to the Meston Committee?

Mr. SAMUEL: I understand that the Committee proceeded on the assumption that notes of the evidence taken would not be published. The notes, therefore, are not n a form suitable for publication.

Mr. RICHARDSON: Is the hon. Gentleman not aware that reliable evidence has been submitted to the Committee which would be of great service, and cannot he see his way to give us some of that evidence so that we may go on the right lines in regard to the education of the people?

Mr. SAMUEL: No, I cannot.

Oral Answers to Questions — MERCHANT SHIPPING (LINE-THROWING APPARATUS).

Mr. AMMON: I beg to move,
That leave be given to bring in a Bill to make provision for a line-throwing appliance on certain ships.
The Bill which I ask leave to bring in is a three-Clause Bill intended primarily
to amend Section 427 of the Merchant Shipping Act, 1894. That Section has reference to compulsory provisions for safety at sea, but provides only for buoys, rafts and other things for use when a ship is no longer safe. There is no provision made for the casting of a line from ship to ship or from shore to shore as a means of assistance during times of distress or wreck. The proposal is, that every ship exceeding 500 tons gross register shall be compelled to carry an appliance approved by the Board of Trade to throw a rope of not less than half an inch in circumference, and with a breaking strain of 350 lbs., for a distance of at least 150 yards. The necessity for this appliance was first brought prominently to the notice of the public on the occasion of the wreck of the "Berlin" at the Hook of Holland, in February, 1907, when it was found upon inquiry that a great many lives could have been saved had the ship been equipped with the appliance for which I am now asking that authority should be given. Following upon that wreck, a sub-committee was appointed by the Merchant Shipping Advisory Committee. They went into the subject, and made strong recommendations for the prevision of some such appliance. The main Committee agreed, and afterwards reported:
We are convinced that nothing short of the compulsory carriage of line-throwing appliances will be completely satisfactory.
This year the Board of Trade have raised the question with the Chamber of Shipping of the United Kingdom, and have put before them the choice of either voluntarily putting on a line-throwing appliance, or else eventually being compelled to do so. I would remind the House that during last year there were no fewer than 262 launches of lifeboats belonging to the Royal National Lifeboat Institution, and that no fewer than 354 lives were saved in that connection. But this in no way tells the whole story of the amount of distress and the number of wrecks which take place at sea. A good deal of help could be given and a great many valuable lives could be saved if ships were equipped with an appliance enabling them to throw a communicating cord, either to the shore, or to other ships. I feel confident that the House will give
authority to bring in this Bill, and I trust that the Government will provide facilities for its future progress.

Question put, and agreed to.

Bill Ordered to be brought in by Mr. Amnion, Mr. Frederick Roberts, Mr. Webb, Mr. Greenwood, Mr. Gosling, Mr. Sexton, Mr. Shinwell and Mr. Johnston.

MERCHANT SHIPPING (LINE-THROWING APPLIANCE) BILL,

"to make provision for a line-throwing appliance on certain ships," presented accordingly, and read the First time; to be read a Second time upon Friday, 6th July, and to be printed. [Bill 162.]

Oral Answers to Questions — CHAIRMEN'S PANEL.

Mr. William Nicholson reported from the Chairmen's Panel; That they had appointed Mr. Short to act as Chairman of Standing Committee B (in respect of the Rubber Industry Bill).

Report to lie upon the Table.

Oral Answers to Questions — MESSAGE FROM THE LORDS.

Consolidation Bills,—That they have added a Lord to the Joint Committee on Consolidation Bills pursuant to the Commons' Message of the 15th June.

Oral Answers to Questions — PRIVATE BILLS (CONSOLIDATION) (JOINT COMMITTEE).

Report in respect of North Metropolitan Electric Power Supply Bill [Lords] (pending in the Lords), brought up, and read; Report to lie upon the Table, and to be printed.

Oral Answers to Questions — DUDLEY CORPORATION BILL.

Reported, with Amendments, from the Local Legislation Committee (Section A); Report to lie upon the Table, and to be printed.

Orders of the Day — Mr. SPEAKER'S RETIREMENT.

KING'S ANSWER TO ADDRESS.

Considered in Committee.

[Mr. JAMES HOPE in the Chair.]

The PRIME MINISTER (Mr. Baldwin): I beg to move,
That the annual sum of £4,000 net be granted to His Majesty out of the Consolidated Fund of the United Kingdom, the said annuity to commence and take effect upon the day upon which the Right Honourable John Henry Whitley, late Speaker of the House of Commons, ceased to hold the office of Speaker of the House of Commons, to be settled in the most beneficial manner upon and to continue during the life of him the said Right Honourable John Henry Whitley.
I move this Motion, which is in accordance with precedent, and which, I hope, will meet the general desire of all Members of the Committee.

Mr. CLYNES: I beg to move, in line 1, to leave out "£4,000," and to insert instead thereof "£1,000."
I observe that in the Press—even in the "Times" of this morning—this Amendment is described as an attempt to minimise the services of Mr. Whitley. I can say, on behalf of all those for whom I can speak on this side of the House, that that is a wholly inaccurate description of our intentions and of our feelings. We have already, without qualification, expressed our admiration for the personal qualities and the eminent services of Mr. Whitley during his occupation of the Chair of this House. And the reputation of the late Speaker, in our judgment, has been enhanced by his refusal of the position and dignity of a peerage which His Majesty proposed to confer upon him. There is also on the Order Paper a proposal to investigate, by means of a suitable committee, the question of the expenses and emoluments attaching to the office of Mr. Speaker. It would not be proper for me at this moment to wander into the general question opened up by that proposal, but by your leave, Mr. Chairman, I should like to say that there is, in our view, a very real distinction, a real difference in substance between, say, a salary for a definite office
and a pension such as that which is now proposed by the Motion which the Prime Minister has moved.
In the case of salary and emoluments there is, in our view, a real case for revision, and, if I may say so, I have had a little personal experience in reaching that conclusion. A pension of this size cannot, we think, be justified if the figure is made to relate to any other State office or to the services of innumerable millions of people in this country who are in their own way rendering such services as they can to the nation. It is a fabulous figure—£4,000 a year. I am certain that millions of people who will read of it will regard it as a sum so colossal as to be beyond justification even in the case of so great and successful a personality as the late Mr. Speaker. We are taking this step on this side of the Committee not without precedent. About seven years ago, those of us who then formed a much smaller party in this House, felt that we were justified upon grounds of principle, and not because we were moved by any personal motives at all in resisting the proposal made from the other side of the House on that occasion. The predecessor of Mr. Whitley will by this time have received in pension a total sum approaching £30,000, and we say that, great and lofty as this office is, fine and successful as have been the services rendered by successive Speakers of recent years, those services do not justify so marked a distinction in the matter of reward as this sum of £4,000 denotes. Accordingly, I beg to move the Amendment, and I believe that it will command a very great amount of support if we are required to go into the Lobby in regard to it.

Lieut.-Commander KENWORTHY: On a point of Order. May I inquire, for my guidance, whether the discussion on this Motion connects with the Motion standing in the names of the right hon. Member for Central Edinburgh (Mr. W. Graham) and other hon. Members which I see is at the end of the Orders?:
The Speakership,—That a Select Committee be appointed to inquire into the emoluments and expenses attaching to the office of Mr. Speaker.
I had been under the impression that that Motion would have been discussed soon after the present Motion, or perhaps at the same time. As things are at pre-
sent, the further Motion will not come on until, perhaps, 15 or 16 hours from now, judging from last night's proceedings. I should like to know whether in discussing the Amendment which has been moved by the right hon. Member for Platting (Mr. Clynes) it would be in order to refer briefly to the Motion standing in the name of the right hon. Member for Central Edinburgh, seeing that that Motion is at the end of the Orders of the day.

The CHAIRMAN: In discussing the grant of a pension, the question of salary cannot be altogether ignored; but as to how far it can be gone into I can only judge when I see how the Debate progresses.

Lieut.-Commander KENWORTHY: May I ask the Prime Minister if he intends to allow time and to allocate a day for discussion of the Motion standing in the, name of the right hon. Member for Central Edinburgh?

The PRIME MINISTER: I am not prepared to answer that question now.

Mr. MACPHERSON: I rise, on behalf of the party with which I work, to support long-standing precedent, and to grant to Mr. Speaker who has just retired, the appropriate allowance suggested by the Prime Minister. The right hon. Gentleman who has moved the Amendment suggested that the time has arrived when we ought to reconsider all these allowances. That may be true, but we have to remember that a pension is, after all, merely deferred pay. If pensions are to be altered, they ought not to be altered at the end of the period of service. Mr. Whitley took office on the understanding that he would get the appropriate allowance at the end of his service. Even the right hon. Member for Platting (Mr. Clynes) does not question the devoted service of Mr. Whitley, nor does anybody in the House. The party to which I belong are unanimously of opinion that, whatever may happen in the future, on this occasion the full emolument should be granted to Mr. Whitley.

Mr. SCRYMGEOUR: I believe that every Member of the Committee will thoroughly endorse, with hearty appreciation, the reference to the distinguished
services rendered by our former Speaker, Mr. Whitley; but I would particularly and earnestly endorse the Amendment moved by the right hon. Member for Platting (Mr. Clynes). We are confronted with a condition of affairs prevailing in the mining districts, which has been emphasised time after time, and it is no laughing matter. The Government have had appeals of the most heart-searching character made to them concerning the appalling conditions under which men, women and children are living to-day, practically in a state of starvation. In these circumstances, we cannot support the grant of a pension of £4,000 a year to the late Speaker, especially when, at the right hon. Member for Platting has pointed out—this answers a remark made by the right hon. Member for Ross and Cromarty (Mr. Macpherson)—on the former occasion the Labour Opposition endeavoured, quite honourably, to raise this very question in the appropriate fashion after the retirement of Mr. Whitley's predecessor, and the election of Mr. Whitley as Speaker. Therefore, no onus can rest upon the Labour party that we are faced with this situation to-day. At any rate I, as an individual Member of this House, would never dare to vote for the grant of such a pension, when the same Government who propose it have reduced even the payment of unemployment benefit to young women—

The CHAIRMAN: The hon. Member is now going wide of the subject before the Committee.

Mr. SCRYMGEOUR: I defer at once to your ruling, and I recognise that I am not entitled to go further into that matter. I have made my point. I have drawn attention to a substantial fact. Controlled by a powerful majority and impelled by the Government Whips, this House has reduced the facilities that give even a reasonable existence to many thousands of people. To-day, we are called upon to grant a large pension to a gentleman whom we all respect, and we respect him more for having declined a so-called honour. He has said, "Keep it to yourselves. I prefer to remain in the company of those with whom I have been associated all my life, rather than be relegated to a position of an entirely different character." Speaking from the working-c ass point of view—[HON. MEMBERS: "Oh!"].
Hon. Members opposite do not know, and I suppose that throughout the whole length of their natural lives they never will understand what it is to undergo the ordeal of the trying conditions which exist amongst the working classes to-day. As Members of this House we hear many agonising accounts of the conditions which confront the working-class people to-day, and we are baffled many times to know what can be done to help them. In these circumstances, let every man and woman in this House go into the Lobby with full responsibility as to what is involved in our vote. We cannot go into the Lobby to vote for a pension of £4,000 a year, when so many people today are in such sore straits.

Lieut.-Colonel JOHN WARD: Even if this were the last time that I might speak in this House, I should like to say a word on this subject, if one were wishing to reduce the salary or pension of a Speaker, I imagine that one would bring it forward at a time when the personality of Mr. Speaker was not involved, and in circumstances when it could not be considered as an attack upon the man himself, or a criticism of his work while holding the office. It is unfortunate that this question should be brought forward now, and it is more unfortunate that the poverty amongst a certain section of the community should be paraded for the purpose of attempting to frustrate the proper recognition of a public servant. The hon. Member for Dundee (Mr. Scrymgeour) ought not to wear so good a suit of clothes as I see him in to-day. There are plenty of poor people without a coat at all. He should give them his coat; then come back and let us see how he looks then. On the same basis, apparently, I ought not to have my dinner until I have been out and found out if there is someone else who wants one. It is absurd to base what we are doing in the case of a servant of this House on such ridiculous contentions as those. It is worse than ordinary party propaganda. It is really silly. There is one other thing. I do not know what the late Speaker must think about it. Considering his conduct with reference to interruptions and disorder among those hon. Members who are now opposing his pension, in my view they are just stabbing the best
friend they ever had. It may be that when the next Election approaches this piece of propaganda will be used. Trot it out at Stoke-on-Trent, and see if you will get a single vote!

Lieut.-Commander KENWORTHY: I hope this discussion will be in keeping with the usual Debates in this House. It is quite possible for the speech of the hon. and gallant Member for Stoke-on-Trent (Lieut.-Colonel Ward) to be followed by angry recriminations, and it was obviously intended to rouse passion. The hon. and gallant Member must have overlooked the fact that the only party in this House which ever had a Motion on the Paper censuring Mr. Whitley was the Liberal party. I was a member of the Liberal party at that time and voted for it, because I considered they were right. I do not want to accuse the Liberal party of trying to make amends for that act now; I do not think the right hon. Member for Ross and Cromarty (Mr. Macpherson) was making an eleventh hour repentance by supporting this pension. And we, in moving this reduction, do not in any way desire to cast reflections or make any attack upon the late Speaker. We must look at the matter as a whole. As long as you have the tremendous extremes of wealth on the one hand—I am not referring; to Ministers and officers of this House—as long as you have enormous fortunes outside this House and all the luxury that is possible by those who control great resources, and at the other end of the scale the direst poverty and conditions under which men, who are doing arduous, skilled and dangerous work, cannot bring up their families in comfort, you will have social injustices existing. That is a point which hon. Members opposite cannot ignore. Many hon. Members opposite, I agree, recognise it and are stirred by it, and are trying to remove it. I think the Prime Minister appreciates the difficulty of trying to remove the social injustices which exist under the present capitalistic system. We on these benches can only protest on certain occasions when they offer themselves against these injustices, and we regret that the present occasion might give an opportunity to remarks like those which fell from the hon. and gallant Member for Stoke-on-Trent imputing the lowest motives to us. Such imputations are
altogether unjustified. The Radicals of the past, before the Labour party existed, protested again and again against these inequalities, and if the spirit of the old Radicals—

The CHAIRMAN: The hon. Member is going far beyond the Motion before the Committee.

4.0 p.m.

Lieut.-Commander KENWORTHY: May I put it this way? In the past the great Radical leaders of the Liberal party have taken action such as this, and have protested against official pensions and salaries, and what the Radicals of bygone generations did, surely we on these benches representing the Socialist party can do now, and should do. This is, perhaps, the most unfavourable ground upon which we could fight. Apparently, to the unthinking, we are seeking to reduce the pension of a beloved colleague of ours who has only just left the House, and we are open to much misrepresentation in consequence. Nevertheless, we are bound on this and every other occasion to protest against the poverty of the poorer classes of this country. We can only do it in this way; there is no other course open to us. The public servants of this country are not overpaid. No one is in politics to-day with the idea of making a fortune, at any rate in this country, and we are proud of that fact. It is well known that the Speaker of the House of Commons, under present conditions, has to spend considerable sums out of his private purse, and the same thing applies to the holders of most offices of State. If we could have a just system under which the aristocracy—I use the word in its broadest sense—would fill the great offices of State and control the great industries of the country for the good of the people as a whole, it would be possible to remove the injustices and the tremendous differences between wealth and poverty against which, by the action we have taken, we are protesting to-day. We have very few opportunities of attacking the system which makes vast fortunes possible at the present time. This Amendment attempting to reduce the pension of the late Speaker is really a protest against the possibility of a lucky speculator, the man who, in many cases, does no useful work, the financial manipulator of markets, being able to
amass a huge fortune. [Interruption.] It is a protest against the whole system of the lucky landlord amassing a fortune.

The CHAIRMAN: While it may be in order for the hon. and gallant Gentleman to say that while poverty exists this grant is excessive, it is not relevant to go into the question of conditions at large.

Sir COOPER RAWSON: Will the hon. and gallant Gentleman explain why he does not give away his Rolls-Royce and get a baby Austin?

Lieut.-Commander KENWORTHY: I do think it should be possible to keep the personal note out of this discussion. This is really in no way a personal reflection, if it is necessary to say so, on the last occupant of the Chair. Surely that is understood. While we on these benches are trying by every means to reduce the injustice which we feel is getting worse in the country, we are bound to take the action that we are taking today, and I am only glad that I have the opportunity of voting for this Amendment, as I voted for the last one seven years ago, and as I will vote on any future occasion when it is proposed to grant, by direct vote of this House, a pension of £4,000 a year to however eminent a servant, until something more active is attempted by the Government of the day to remove the avoidable causes of the poverty of the people of this country.

Mr. WARDLAW-MILNE: I intervene only for ore moment, but I hope I may be permitted to ask the hon. and gallant Member for Central Hull (Lieut.-Commander Konworthy) if he will give us answers to three definite questions which, to my mind, arise out of the speech to which we have just listened. In the first place, does he believe, or does any Member of the Socialist party really believe that the day of the removal of the inequalities of which we have heard so much and towards which we are all working, will be brought nearer by one moment by the passing of this Amendment? Secondly, I ask the hon. and gallant Gentleman whether he will put his desire to equalise everybody into practice by immediately bringing forward a Motion, equally applicable to the rest of us as to him, that rather than we should vote for a reduced pension to the late Speaker, we should vote immediately for
the reduction of the salary of every Member of Parliament? [Interruption.] Thirdly, I would ask him whether he has entirely forgotten his earliest lessons and whether it is not the case that we have the highest authority for the statement that the poor will always be with us.

The CHAIRMAN: The hon. Gentleman would not be in order in going into the general social conditions on a Motion of this sort.

Mr. WARDLAW-MILNE: I bow at once to your ruling. I have no desire to go into general social conditions, but I do suggest that when an Amendment of this kind is brought forward, and is backed by arguments such as we have heard, it is not unfair to say that those who support it by such arguments know in their hearts that it is pure hypocrisy to suggest that a vote on this subject will have any effect whatever upon the general conditions of life in this land.

Mr. W. THORNE: I hope that none of us is going to discuss the subject of riches and poverty on this occasion, because I believe it would be entirely out of order. All of us on these benches could show the inequalities of our present system if we thought it necessary. The only reason I have risen to speak is in consequence of a remark of the right hon. Gentleman who said that at the time the late Speaker accepted the position, it was clearly on the understanding that he was to get a pension of £4,000 a year. I was in this House at the time, and I think I took part in voting the late Speaker into the position he occupied for seven years. I have as much admiration for him as anyone in this House. He and I have been personal friends, and he has rendered me valuable help on more than one occasion. This, however, is a question of principle, and I would ask whether it is to be understood that when the present Speaker retires he is to get £4,000 per annum? I want to say quite frankly and definitely, that when I and my colleagues unanimously agreed to the present Speaker occupying the position, there was never a word said about pension.
It is on a question of principle that we are going to vote this afternoon, exactly on the same lines as the late Speaker has refused to accept a Peerage on principle. All of us on these benches believe
in a non-contributory pension. We agree that this pension should be paid by the State. It is a question of amount, and I am more than convinced, from what I know about the late Speaker, that he will be able to live reasonably peacefully and comfortably on £1,000 per annum. At least, I should like to get a chance of retiring on £1,000 a year. I think I could make myself well-contented, and I think every Member on these benches could on that amount. I want to repeat, that when the present Speaker retires, let it be understood that if I am in this House, he is going to get no £4,000 a year as far as I am concerned.

Mr. WRIGHT: I rise to make a few observations on this question from a very deep conviction. I was returned to this House by an industrial area, where we have very acute destitution and in some cases actual starvation, and I should be failing in my duty to my constituents if I did not support the Amendment. I entirely disassociate myself and my colleagues from any personal aspect in discussing this question, but we have just as much right to debate this question, it being on the Order Paper, as any other question. I feel that it is a matter of duty to raise my protest against a pension of £4,000 a year and in favour of £1,000 which, after all, is £20 a week, or ten times as much as the average man gets for working. I think that £1,000 a year pension is adequate to meet the needs of the case under modern conditions.
There have been Speakers in this House since 1377. I am not in a position to say what the Speaker was paid in those far distant times, but I have looked up the subject as far as possible. In 1817, 111 years ago, Charles Manners Sutton was appointed Speaker, a position which he occupied until 1835. He had therefore received, at £5,000 a year, a sum of £180,000. He lived until 1845 and received a pension of £2,000 a year, which, I believe, was the amount of the pension then. He consequently drew £20,000 in pension and the total amount paid to him as Speaker and in pension was £200,000. Probably Speaker Manners Sutton did not need a pension, as he was the son of the Archbishop of Canterbury who, from 1805 to 1828, a period of 23 years, had a salary of £22,000 a year,
which amounted in all to £484,000. Therefore, I submit that the pension to the Speaker in that case could not have been on the ground of need. The next Speaker was James Abercromby, who in four years from 1835 to 1839 received a total salary of £20,000, and retired on a pension, say of £2,000 per annum, which he drew for 19 years, until 1858, amounting to £38,000, or a total of salary and pension of £58,000.
Then came Mr. Speaker Shaw-Lefevre from 1839 to 1858, and we have the authority of a former Member of this House, once an Under-Secretary, the late Mr. G. W. E. Russell, that it was on the suggestion of Mr. Shaw-Lefevre that the pension was increased from £2,000 to £4,000 a year, because he said that as he did not want the pension, which had hitherto been one of £2,000 a year for two lives, to be a burden on posterity, he would rather take a pension of £4,000 a year for his own life only. Now what did Shaw-Lefevre (afterwards Lord Eversley) receive as a matter of fact? As Speaker for 18 years, he received £90,000, and in pension (£4,000 a year for 31 years) he received £124,000, or a total of £214,000. On these grounds, we object to paying a pension of £4,000 a year to the retiring Speaker, and if I stood alone I should protest against it under modern conditions. The facts about other Speakers are similar to those I have given. Mr. Speaker Brand was followed in due time by Mr. Speaker Peel. Next came Mr. Speaker Gully, who in 10 years received in salary £50,000 and for four years a pension of £4,000 or a total of £66,000.
I submit that we are not against a pension. We are in favour of pensions for all, and until pensions are provided for all, especially where they are need pensions, apart from the personal element altogether, I submit that it is a disgrace to this nation, which cannot afford pensions such as these which originated in days when conditions were entirely different, and when we have millions of people in this country who are destitute, and many on the border line of starvation. I should be failing in my duty as representative of the Rutherglen Division if I did not raise my voice in protest against voting a sum of £4,000 a year to the retiring Speaker,
without in the least degree having any bias. I received many acts of kindness from the ex-Speaker and I had a high personal regard for him, as we all have on these benches. As has been said, positions of disorder have not been confined to one side in this House during the last five years. When there has been any disorder it has very often been provoked by other Members. There is no personal element in what I am doing, but I have great pleasure in supporting the Amendment.

The PRIME MINISTER: I have no exception at all to take to the observations which fell from the right hon. Gentleman the Deputy-Leader of the Opposition. The whole House is united in the respect which is felt for the late Speaker. I think it was on Mr. Speaker Peel's retirement that Mr. Keir Hardie first moved an Amendment like the one which has been moved to-day. It was also moved in Mr. Speaker Gully's time and in Mr. Speaker Lowther's time. It has been moved again to-day, and this is the first time, if my memory serves me aright, that it has been moved officially by the Opposition. For myself I regret it. I say that frankly, for I think it is a mistake. I entirely agree that it has been done on principle; I accept that statement certainly. Having said that, I think I have every right to inform the House why in my view this Resolution has been moved time after time. This is the only sum of money granted as a pension to anyone who serves this House in a political capacity, and it has been given, I understand, to Speakers in the past as a tribute to a great office and the dignity with which this House has always desired to clothe that office.
The Speaker is almost the only man in politics—I include the Prime Minister in the list—who is completely debarred from entering any kind of business or from seeking to promote his own welfare, and it has always seemed, and rightly seemed, that in the Speaker's case, as in my view in the Prime Minister's case, when his term of office is done he should not enter into the ordinary competition of the market-place with other people, but should preserve for the rest of his life the dignity of the great office to which he had been called. That is the reason undoubtedly why those who went before
us decided on giving such a pension as was thought in those days sufficient to maintain the Speaker in a position of dignity and in a position where he would be completely relieved of all anxiety as regards the future. To-day, of course, the value of that pension is very much smaller than it was owing to the decrease in the value of money, and very much smaller owing to the taxation that is imposed upon it, I have not been able to trace the history of the word "net" which appears in the Motion, but it does not mean "net" in the sense in which we understand it. This particular pension is subject to Income Tax and Super-tax. I think the word was used in the old sense as meaning that no one is to have any portion of it before it gets into the Speaker's pocket.

Mr. W. THORNE: We understood that the Speaker will get £4,000 a year absolutely clear.

The PRIME MINISTER: No, Sir. That was explained, I think, on the occasion of Mr. Speaker Lowther's resignation, when the then Leader of the House said that the amount was liable to Income Tax and Super-tax. As I say, those were the views of chose days. Those are the views which are held on our side of the House, and, from what my right hon. Friend said, on the Liberal Benches also. The Official Opposition take a different view, as I say, on principle. I accept that certainly. I think that in this particular instance it is a pity, because I should like to have unanimity in the House. That we cannot have, and I accept the position. The only plea that I would make to the House now is that we should proceed soon to a decision, because I can see quite clearly that in a Debate of this kind we might wander very far from the point at issue, which is a simple one. The principle has been declared. We have had stated clearly and temperately where we stand in the matter. The sorriest tribute we could pay to Mr. Whitley would be to have a rambling Debate. I therefore hope that the House will come to a decision now. That will be the best tribute that we can pay to the late Speaker.

Mr. J. JONES: I am not going to enter into any acrimonious discussion. I am
not going to say a single word against the merits of the late Speaker, because no one has a greater right to render him a tribute than I have. Some of his kindness has been expressed not only in the House but outside. I wish, however, to say this: It is not a question of the amount of money that is to be received as a pension by the late Speaker. The question is, what is the relative value of the services rendered by all the servants of this House. Who are the servants of this House? All of us. I suggest that, though I am not a very prominent Member of this House—only when the newspapers take advantage of my activity—the Speaker is not worth £10 more than I am when he is doing nothing and I am here. Take the values of all of us. If it is a question of services rendered, the Speaker has simply to stand in the same position as any other Member of the House, because after all he is a Member and nothing more and nothing less.
The values that some people create in their own minds are values due to position—social values, values of parades and functions and hospitalities, we are told. I have to "stand" as much in hospitality, in proportion to my means, as any Speaker, and sometimes more. I have to borrow money to pay my expenses sometimes. All this sort of thing is advanced as an argument in favour of extravagant pensions. I should say that the late Speaker ought not to be under the obligation of finding refreshments for all and sundry. He ought not to be compelled to go down on his knees to anyone, because in this House he is greater than all during the time that he occupies his position. Therefore, in supporting this Amendment, it is not a matter of what the late Speaker was or was not; it is a matter whether we will continue this evil system which grew up in evil days, in the days of corruption, which history can prove, when the Speaker of the House of Commons was very often used as an instrument to support reactionary Members on behalf of people outside.
When we start giving pensions, let us be fair all round. We have other servants in this House, some of them working from nine in the morning till the House rises the following morning. They do not have a chance of going to bed then, and they work for 30s. a week. Where do they come in when you are
giving pensions? They get the sack and no pension. When the House rises in five or six weeks' time, they will go looking for a job somewhere else, and will be signing on at Employment Exchanges. With all due deference to the Speaker, I say that the men and women who are working in this House for our convenience, are deserving of better treatment than they are getting from this honourable House. That is a reference to what takes place inside the House, and I am not taking you to Dan and Beersheba. I should have thought that Labour Members of Parliament would worry themselves more about the rotten wages and long hours of the employés of this House than about giving £4,000 a year to a man who is already well situated. I am not going to transgress the Rules, because I know very well that if I did I would soon be under the harrow. On principle I am supporting this Amendment in favour of £1,000 a year. I would retire to-morrow morning if you would offer me such a pension; in fact I would retire now. I believe a lot of others would vote for it, if they had the opportunity, in order to get rid of an inconvenient Member from the Back Benches.

The CHAIRMAN: There is no question of an allowance or pension to the hon. Member in the Motion before the Committee.

Mr. JONES: I have no hope in that direction. I want to add my little word to what has been said. I go down to my own constituency and find how difficult it is for men and women who are entitled to an old age pension to get it. Then I come here and see how easy it is for other people to get pensions. Men and women who have worked 50 years in one factory have almost to go down on their knees to get a pension of 10s. a week. Here, after seven years of service, very splendidly rendered, a pension of £4,000 a year is suggested. I want to say in all sincerity that if a man with seven years' service is entitled to a pension, £1,000 a year is a splendid allowance. We also say that better consideration should be given to the men and women who have to find that money in the long run. This House does not pay it. The man outside will have to pay it. The ordinary man in the street will have to
find the money. I associate myself with the Amendment as a protest against a system which is altogether wrong. There should be some relationship between the reward for services renderd in this case and the reward for services rendered by the other people who have to foot the bill.

Mr. SAKLATVALA: I beg to submit one or two points to the Prime Minister, especially in favour of the Amendment. In the first place, I maintain that this House which has the insolence as well as the stupidity to pass 10s. a week as a pension for old age pensioners, should at least hesitate to put side by side with that a pension of £4,000 a year. In my humble judgment there should be no pension payable by the State of less than £150 or more than £500 a year. A second reason which urges me to support the Amendment is that I believe to-day's vote will be accepted by the workers of the country as a solemn pledge on the part of the Labour Leaders not to accept salaries of more than £2,000 a year when they become Ministers of the Crown.

Lieut.-Commander KENWORTHY: Surely you mean £1,000?

Mr. SAKLATVALA: I know what I mean without that interruption. When the Labour Government took office the figure of £2,000 was positively suggested.

The CHAIRMAN: That subject is really not relevant to the Motion.

Mr. SAKLATVALA: I agree, but I was asked a question and that was why I explained the reason I mentioned £2,000 and not £1,000. I seriously put it to the Committee that the time has arrived when the payments made to Parliamentarians who hold office, Ministerial or otherwise, should be models of moderation and not models of extremism. The Prime Minister adduced as a reason for this Resolution that ex-Speakers, as well as ex Prime Ministers, should hold themselves aloof from competition in the market—which I fully endorse—and that they ought to live in what he described as dignity and comfort. Now that is, I would submit to the Committee, an erroneous old-world notion which is sticking to us still at a time when it ought not to apply in any serious manner. There was a time when this Parliament was only nominally elected by a democracy and when Ministers and officers of Par-
liament were considered to be next to the Throne. Their functions, their private lives, and the amenities extended by them were so designed as to approximate closely to the hospitality displayed by Royalty. Those times have gone. We are no longer in a position to take the view that those who hold office, either as Speakers or as Ministers of this House, ought to vie with Royalty in their private lives. The life of a Speaker of this House, during his term of office or in his retirement, should be the life of an average citizen of this country. Parliamentarians who have held office ought to live lives such as they themselves have helped to shape for the citizens of this country and not seek to go far above that level. On those grounds I suggest that retiring Speakers as well as Ministers should now begin to regard salaries, emoluments and pensions, not with the old-world notion of so-called "dignity," expressed in flippant extravagance, but in relation to the real necessities of life as expressed in the lives of millions of citizens of this country.

Mr. HARDIE: As one who, during five years in the House of Commons, has been protesting against the cobwebs of tradition which bind Parliament, I desire to express on this occasion what I deeply feel on this subject. We are often told when questions of this kind arise that the responsibilities of office demand certain things. But if we were to deal with this matter on a business footing we should first ask ourselves: Why should the expenses of an office, which is concerned with conducting the business of the State, be included in the salary of the person holding that office? Why should not any expenditure which is necessary for the carrying out of the duties of any office, be met directly by the Chancellor of the Exchequer? If that system were adopted, it would relieve the occupants of these offices of considerable trouble. May I use as an illustration the statements which are at present being made, from an historical point of view, in regard to the financial difficulties into which many gentlemen in this country have been put by accepting the office of Prime Minister. Why should any occupant of that high office get into financial difficulties merely through the fact of being a Prime Minister?
Is it not absurd that the expenses of the office, which may vary from year to year according to the conditions, national or international, should be included in the salary of the occupant of that office?
I hope the Committee will realise that this is not so much a personal question as a question of reorganisation, of getting away from the conditions of hundreds of years ago, and bringing our selves up to date. I put it to the Committee, as one with some business experience, that in order to get the best return and the best men, we ought to dissociate entirely the expenses of all offices of this kind from the salaries attaching to those offices. At election times one hears it said, "Just return me, and I will do the work, and the honour will be quite enough for me." That principle ought to be carried out. The honour ought to be quite enough and the expenses attaching to the office ought to be met directly by the Exchequer.

The CHAIRMAN: This is getting rather a long way from the terms of the Motion. The hon. Member is opening up a very interesting question, but one which is really quite different from the subject of the Motion.

Mr. HARDIE: All these things lead up to the question of pensions in one form or another. I am not going to bleat about my respect for the late Speaker. He knows what my feelings are, and I do not worry about the opinions held by any of my colleagues in Parliament in that respect. I am speaking now without any personal feeling at all and entirely on the basis of principle. All those who bleat about dignity in this connection do not understand what it means. The mere fact that the British House of Commons has conferred the honour of the Speakership upon a man should be quite sufficient to carry that individual with dignity through the remainder of his life. The Prime Minister, in extenuation of his plea that this grant was necessary, said that it was in order to keep up dignity. Money does not keep up a man's dignity. If it did, all the financial twisters in London would be honoured to-day, but they are not. It is not a question of what a man has, but of whether a man is held in respect by his fellows or not. That is what constitutes dignity and I
hope, to-day, this Committee by its vote will show that it is prepared to keep up with the times and to go forward in the direction of proper business organisation by detaching the expenses of these offices from the salaries. Let us not have Prime Ministers' widows pointing out how they have suffered because of the fact that their husbands have held office. Do not let us go to the nations who are associated with us saying, "Here we have ruined a man, denied him all business outlets, and now,

Division No. 213.]
AYES.
[4.39 p.m.


Agg-Gardner, Rt. Hon. Sir James T.
Eden, Captain Anthony
Jones, Henry Haydn (Merioneth)


Albery, Irving James
Edge, Sir William
Kennedy, A. R. (Preston)


Alexander, E. E. (Leyton)
Edwards, J, Hugh (Accrington)
Kindersley, Major G. M.


Allen, Sir J. Sandeman
Elliot, Major Walter E.
King, Commodore Henry Douglas


Amery, Rt. Hon. Leopold C. M. S.
Ellis, R. G.
Kinloch-Cooke, Sir Clement


Ashley, Lt.-Col. Rt. Hon. Wilfrid W.
England, Colonel A.
Lamb, J. O.


Astbury, Lieut.-Commander F. W.
Erskine, Lord (Somerset, Weston-s.-M.)
Lane Fox, Col. Rt. Hon. George R.


Baldwin, Rt. Hon, Stanley
Everard, W. Lindsay
Lister, Cunliffe-, Rt. Hon. Sir Philip


Barclay-Harvey, C. M.
Fairfax, Captain, J. G.
Livingstone, A. M


Barnett, Major Sir Richard
Falls, Sir Bertram G.
Lloyd, Cyril E. (Dudley)


Bellairs, Commander Carlyon
Fanshawe, Captain, G. D.
Locker-Lampson, Com. O. (Handsw'th)


Benn, Sir, A. S. (Plymouth, Drake)
Fenby, T. D.
Loder, J. de V.


Bethel, A.
Fleiden, E. B.
Lougher, Lewis


Bird, E. R. (Yorks, W. R., Skipton)
Forrest, W.
Lowe, Sir Francis William


Bird, Sir. R. B. (Wolverhampton, W.)
Foxcroft. Captain C. T.
Lucas-Tooth, Sir Hugh Vere


Boothby, R. J. G.
Frece, Sir Walter de
Luce, Maj.-Gen. Sir Richard Harman


Bourne, Captain Robert Croft
Fremantle, Lieut.-Colonel Francis E.
Lumley, L. R.


Bowyer, Capt. G. E. W.
Gadie, Lieut.-Colonel Anthony
MacAndrew, Major Charles Glen


Brass, Captain W.
Ganzonl, Sir John.
Macdonald, R. (Glasgow, Cathcart)


Brassey, Sir Leonard
Gilmour, Lt.-Col. Rt. Hon. Sir John
MacIntyre, Ian


Briant, Frank
Glyn, Major R. G. C.
McLean, Major A.


Bridgeman, Rt. Hon. William Clive
Gower, sir Robert
Macmillan, Captain H.


Briggs, J. Harold
Grace, John
Macnaghten, Hon. Sir Malcolm


Briscoe, Richard George
Grattan-Doyie, Sir N.
Macpherson, Rt. Hon. James I.


Brocklebank, C. E. R.
Grenfell, Edward C. (City of London)
MacRobert, Alexander M.


Broun-Lindsay, Major H.
Gretton, Colonel Rt. Hon. John
Maitland, A. (Kent, Faversham)


Brown, Ernest (Leith)
Griffith, F. Kingsley
Manningham-Buller, Sir Mervyn


Buckingham, Sir H.
Grotrian, H. Brent
Margesson, Captain D.


Bullock, Captain M.
Guinness, Rt. Hon. Walter E.
Marriott, Sir J. A. R.


Burman, J. B.
Hacking, Douglas H.
Mitchell, S. (Lanark, Lanark)


Cautley, Sir Henry S.
Hamilton. Sir R. (Orkney & Shetland)
Mitchell, W. Foot (Saffron Walden)


Cayzer, Sir C. (Chester, City)
Hammersley, S. S.
Moore, Lieut.-Colonel T. C. R. (Ayr)


Cazalet, Captain Victor A.
Hannon, Patrick Joseph Henry
Moore, Sir Newton J.


Cecil, Rt. Hon. Sir Evelyn (Aston)
Harland, A.
Morris, R. H.


Chamberlain, Rt. Hn. Sir J.A. (Blrm.,W.)
Harris, Percy A.
Morrison-Bell, Sir Arthur Clive


Chamberlain, Rt. Hon. N. (Ladywood)
Harrison, G. J. C.
Nelson, Sir Frank


Chapman, Sir S.
Harvey, G. (Lambeth, Kennington)
Newman, Sir R. H. S. D. L. (Exeter)


Christie, J. A.
Harvey, Major S. E. (Devon, Totnes)
Nicholson, O. (Westminster)


Churchill, Rt. Hon. Winston Spencer
Haslam, Henry C.
Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld.)


Churchman, Sir Arthur C.
Headlam, Lieut.-Colonel C. M.
Nuttall, Ellis


Cobb, Sir Cyril
Henderson, Capt. R.R. (Oxf'd, Hen ey)
Oakley, T.


Cochrane, Commander Hon. A. D.
Henderson, Lieut.-Col. Sir Vivlan
O'Neill, Major Rt. Hon. Hugh


Cohen. Major J. Brunel
Heneage, Lieut.-Colonel Arthur P.
Owen, Major G.


Colfox, Major Wm. Phillips
Henn, Sir Sydney H.
Penny, Frederick George


Conway, Sir W. Martin
Hennessy, Major Sir G. R. J.
Perkins, Colonel E. K.


Cooper, A. Duff
Hills, Major John Waller
Peto, Sir Basil E. (Devon, Barnstaple)


Couper, J. B.
Hilton, Cecil
Peto, G. (Somerset, Frome)


Cowan, D. M. (Scottish Universities)
Hoare, Lt.-Col. Rt. Hon. Sir S. J. G.
Preston, William


Craig, Sir Ernest (Chester, Crewe)
Holbrook, sir Arthur Richard
Radford, E. A.


Crookshank, Col. C. de W. (Berwick)
Holt, Capt. H. P.
Ramsden, E.


Crookshank, Cpt.H. (Lindsey, Galnsbro)
Hope, Capt. A. O. J. (Warw'k, Nun.)
Rawson, Sir Cooper


Culverwell, C. T. (Bristol, West)
Hopkins, J. W. W.
Roberts, E. H. G. (Flint)


Curzon, Captain Viscount
Hopkinson, Sir A. (Eng. Universit'es)
Robinson, Sir T. (Lancs, Stretford)


Dalkeith, Earl of
Hore-Bellsha, Leslie
Rodd, Rt. Hon. Sir James Rennell


Davies, Maj. Geo. F. (Somerset, Yeovil)
Horne, Rt. Hon. Sir Robert S.
Ropner, Major L.


Davies, Sir Thomas (Cirencester)
Hudson, Capt. A. U. M. (Hackney, N.)
Ruggles-Brise, Lieut.-Colonel E. A.


Davies, Dr. Vernon
Hume, Sir G. H.
Runciman, Hilda (Cornwall, St. Ives)


Davison, Sir W. H. (Kensington, S.)
Hurd, Percy A.
Russell, Alexander West (Tynemouth)


Dean, Arthur Wellesley
Hutchison, Sir Robert (Montrose)
Rye, F. G.


Dixey, A. C.
Iliffe, Sir Edward M.
Salmon, Major I.


Drewe, C.
Jackson, Sir H. (Wandsworth, Cen'l)
Samuel, A. M. (Surrey, Farnham)


Duckworth, John
Jephcott, A. R.
Sandeman, N. Stewart

after we have had his services, his widow and family may get into poverty." That is not a dignified position, but dignity is not a question of money at all. The respect of one's fellow citizens in a nation of honourable men ought to be quite sufficient for anyone.

Question put, "That '£4,000' stand part of the Question."

The Committee divided: Ayes, 224; Woes, 103.

Sandon, Lord
Sueter, Rear-Admiral Murray, Fraser
Watts, Sir Thomas


Savery, S. S.
Sugden, Sir Wilfrid
Wayland. Sir William A.


Scott, Rt. Hon. Sir Leslie
Thorn, Lt.-Col. J. C. (Dumbarton)
Wells, S. R.


Shepperson, E. W.
Thompson, Luke (Sunderland)
White, Lieut.-Col. Sir G. Dairymple.


Sinclair, Major Sir A. (Caithness)
Thomson, F. C. (Aberdeen, South)
Wiggins, William Martin


Skelton, A. N.
Thorne, G. R. (Wolverhampton, E.)
Williams, Com. C. (Devon, Torquay)


Smith, R. W. (Aberd'n & Kinc'dlne, C.)
Tichfield, Major the Marquess of
Williams, Herbert G. (Reading)


Smithers, Waldron
Tryon, Rt. Hon. George Clement
Womersley, W. J.


Spender-Clay, Colonel H.
Vaughan-Morgan, Col. K. P.
Wood, E. (Chest'r, Stalyb'dge & Hyde)


Sprot, Sir Alexander
Waddington, R.
Worthington-Evans, Rt. Hon. Sir L.


Stanley, Lieut.-Colonel Rt. Hon. G. F.
Wallace, Captain D. E.



Strauss, E. A.
Ward, Col. I. (Stoke-upon-Trent)
TELLERS FOR THE AYES.—


Streatfeild, Captain S. R.
Warrender, Sir Victor
Commander B. Eyres Monsell and


Styles, Captain H. Walter
Waterhouse, Captain Charles
Major Sir William Cope.




NOES.


Adamson, Rt. Hon. W. (Fife, West)
Hayes, John Henry
Sexton, James


Adamson, W. M. (Staff., Cannock)
Hirst, G. H.
Shaw, Rt. Hon. Thomas (Preston)


Alexander, A. V. (Sheffield, Hillsbro')
Hirst, W. (Bradford, South)
Shepherd. Arthur Lewis


Amnion. Charles George
Hudson, J. H. (Huddersfield)
Shlels, Dr. Drummond


Baker, Walter
Johnston, Thomas (Dundee)
Shinwell. E.


Barker, G. (Monmouth, Abertillery)
Jones, J. J. (West Ham, Silvertown)
Short, Alfred (Wednesbury)


Batey, Joseph
Jones, Morgan (Caerphilly)
Sitch, Charles H.


Bondfield, Margaret
Kelly, W. T.
Smillie, Robert


Bowerman, Rt. Hon. Charles W.
Kennedy, T.
Smith, Ben (Bermondsey, Rotherhithe)


Broad, F. A.
Kenworthy, Lt.-Com. Hon. Joseph M.
Smith, H. B. Lees, (Keighley)


Bromfield, William
Kirkwood, D.
Snell, Harry


Brown, James (Ayr and Bute)
Lansbury, George
Snowden, Rt. Hon. Philip


Buchanan, G.
Lowth, T.
Stamford, T. W.


Buxton, Rt. Hon. Noel
Lunn, William
Stewart, J. (St. Rollox)


Cape, Thomas
Mackinder, W.
Sutton, J. E.


Charleton, H. C.
MacLaren Andrew
Thorne, W. (West Ham, Plaistow)


Cluse, W. S.
Maclean, Neil (Glasgow, Govan)
Thurtle, Ernest


Clynes, Rt. Hon. John R.
Malone, C. L'Estrange (N'thampton)
Tinker. John Joseph


Compton, Joseph
March, S.
Townend, A. E.


Connolly, M.
Maxton, James
Trevelyan, Rt. Hon. [...]. P.


Cove, W. G.
Morrison, R. C. (Tottenham, N.)
Varley, Frank B.


Dalton, Hugh
Murnin, H.
Viant, S. P.


Day, Harry
Palln, John Henry
Watson, W. M. (Dunfermline)


Dunnico, H.
Paling, W.
Watts-Morgan, Lt.-Col D. (Rhondde)


Gardner, J. P.
Parkinson, John Allen (Wigan)
Wellock, Wilfred


Gibbins, Joseph
Pethick-Lawrence, F. W.
Westwood, J.


Gillett, George M.
Ponsonby, Arthur
Wheatley, Rt. Hon. J.


Gosling, Harry
Potts, John S.
Wilkinson, Ellen C.


Graham, Rt. Hon. Wm. (Edin., Cent.)
Richardson, R. (Houghton-le-Spring)
Williams, Dr. J. H. (Llanelly)


Greenall, T.
Riley, Ben
Williams, T. (York, Don Valley)


Greenwood, A. (Nelson and Colne)
Ritson, J.
Wilson, R. J. (Jarrow)


Groves, T.
Saklatvala, Shapurji
Wright, W.


Grundy, T. W.
Salter, Dr. Alfred
Young, Robert (Lancaster, Newton)


Hall, F. (York, W.R., Normanton)
Scrymgeour, E.



Hardie, George D.
Scurr, John
TELLERS FOR THE NOES.—




Mr. Whiteley and Mr. T. Henderson.

Resolution to be reported To-morrow.

Orders of the Day — FINANCE BILL

Further considered in Committee [Progress, 26th June].

[Mr. JAMES HOPE in the Chair.]

CLAUSE 15.—(Continuance of allowance for repairs under Section 28 of 13 and 14 Geo. 5, c. 14.)

Question again proposed, "That the Clause stand part of the Bill."

Clauses 16 (relief from double taxation in respect of British Income Tax and Irish Free State Income Tax) and 17
(Summary recovery of Income Tax in Northern Ireland) ordered to stand part of the Bill.

CLAUSE 18.—(Permanent annual charge for National Debt.)

The following Amendment stood upon the Order Paper in the name of Mr. LEES-SMITH and other HON. MEMBERS:

In page 11, line 39, to leave out Subsection (1).

The CHAIRMAN: With regard to this Amendment, it proposes to leave out a Sub-section that is vital to the whole Clause, and that, by repeated precedents, is out of order. The question may be argued on the Clause itself.

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Mr. GILLETT: This Clause introduces a rather important principle once again into our financial structure. The first part of the Clause, that part which we wished to delete, concerns that Section of the Finance Act, 1923, which repealed certain provisions concerning the Sinking Fund that had been passed in previous years and laid down as a principle that there must be a Sinking Fund which, in the first year, 1923–4, was to be £40,000,000, in the next year £45,000,000, and in subsequent years £50,000,000. This amount has been entered in the Budgets since that date, and it has on certain occasions been increased by other funds for the redemption of debt. The Chancellor now proposes to revert to a custom that was brought into the national finance by Sir Stafford Northcote when he instituted the debt charge at £28,000,000 a year, and the right hon. Gentleman proposes that under the altered circumstances a charge for debt purposes of £355,000,000 should be the permanent figure for the years to come, the only exception being that in the present financial year the figure should be £369,000,000.
If we look at the actual charges for interest that were incurred in last year's Budget, we find that the actual sum paid in interest was nearly £314,000,000, and at the same time there was a Sinking Fund of £65,000,000, making a total of £378,000,000. The Chancellor tells us that in the present year he anticipates that the interest charges alone will be reduced from nearly £314,000,000 to £304,000,000, and I gather that it is upon an interest charge of this figure, which he thinks at any rate will be sufficient for the next two or three years, that he is basing the figure of £355,000,000. The first criticism that anyone would have to make is that, of course, the short loan market may disappoint the Chancellor. I acknowledge that at present the outlook would seem to be such as to justify his hopes, I believe that he anticipated a figure of 4 per cent. as being the rate that he would probably be paying for Treasury Bills and the service of the floating debt. The figure at present is somewhat below that, and there might be a possible change as the year goes on.
There has also been another question that has only now obtained the full re-
cognition of the Chancellor—it was specially brought to the attention of the House by my hon. Friend the Member for West Leicester (Mr. Pethick-Lawrence)—and that is the question of Savings Certificates. The peculiar position in which this kind of debt has been placed by the unexpected claims that it has made upon the finances of the country, the way in which these claims seem to have been ignored almost, one might say, impartially by previous Chancellors, and the sudden accumulation of demands for sums that were larger than the Chancellor had expected, have certainly in the last year been responsible for an increased expenditure in interest charges above what the Chancellor had anticipated. I gather that the Chancellor is really making an estimated allowance of £20,000,000 a year to meet the special demand of the Savings Certificates. The first point that seems to me somewhat doubtful is to how far the Chancellor's estimate is going to be correct—I am now dealing only with the present year—or whether he will be disappointed in the rate of interest he will have to pay for his short loans; also whether he will find the Savings Certificates allowance sufficient for his purpose.
Based on the figures already given, the Chancellor arrives at the sum of £304,000,000, he then adds about £51,000,00 to corespond with the original £50,000,000 that has been set aside for Sinking Fund purposes, and then, in order that he may get the total figure for this year up to a Sinking Fund of £65,000,000, he has introduced the reserve fund that had accumulated from the currercy notes. Now that the currency notes are being handed over to the Bank of England, these securities are no longer required, and I believe the House has already given instructions for them to be sold and for the money to be handed over. It might be argued that the Chancellor of the Exchequer, in one sense, is setting aside £65,000,000 this year for Sinking Fund purposes, but, as a matter of fact, when you come to the practical application, £13,000,000 or £14,000,000 of it is nothing more than a book entry. If he is now going to sell one set of stocks and buy another to liquidate part of the debt, it is only taking the money from one pocket and putting it into the other.

The CHANCELLOR of the EXCHEQUER (Mr. Churchill): It reduces the total capital liability.

5.0 p.m.

Mr. GILLETT: Technically it does, but, as a matter of fact, in all probability this £13,000,000 was invested in Government stocks before, and although it has not actually been written off the National Debt, as far as the actual spending of the money and the effect that expenditure would have on the money market is concerned, it will exercise no influence upon the price of stocks. However, that is the way in which the Chancellor finally arrives at the figure which he has placed in his Budget estimate as the requirement for debt for this year. For next year, and for the years that are to follow, he is proposing to make arrangements so that the figure shall be £355,000,000. My own view is that in all probability we may find in the next two or three years that we shall hardly be putting £50,000,000 aside for Sinking Fund, because the margin has been made so small that if the estimated figure for interest charges becomes any larger than the Chancellor has expected, the only thing that happens is that the interest charges will be paid out of money that would otherwise have gone to Sinking Fund purposes. Of course, the reverse process is also to hand to help the reduction of the debt, if the interest charges should decrease in the years to come.
The second point that comes up is the question that, supposing the Chancellor's figures are correct, and we find that the money set aside for interest charges is sufficient, we should have a Sinking Fund of £50,000,000, and as interest charges decrease there will be a larger sum for the Sinking Fund. I doubt whether the principle is sound. We set aside this figure of £355,000,000 year after year, so that at the end of 50 years the whole of the debt will have been wiped out. It will only be wiped out if we do not have Chancellors like the present Chancellor, always looking out hungrily and eagerly for some hen-roost to rob. If we find the interest charges are considerably decreased, say by £30,000,000 or £40,000,000, and then we have a right hon. Gentleman sitting in that place with the instinct of the present Chancellor, I cannot imagine that this scheme would
go on for very many years. What I want to draw the attention of the Committee to, is that it is not desirable that this principle should be instituted at all. In three or four years we all hope that the position will be such that the value of money will have so altered, that we might hope to see a considerable fall in the rate of interest that we have to pay, and that certain conversion operations will be able to be carried out which will be beneficial to the country. I understand from the figures given in the Minority Report of the Colwyn Committee that if you can convert the present debt on the basis of 4½ per cent., there would be a saving of £15,000,000. If it was converted on the basis of 4 per cent., there would be a saving of about £33,000,000 a year. If that should ever be possible, the members of the Committee point out that there is a very considerable figure that would become available for purposes other than debt purposes, provided the Chancellor's scheme was not in operation.
This really brings us to the question of what is the best way of meeting the debt. The majority of the Colwyn Committee really disagree with the Chancellor; perhaps I should say that the Chancellor's proposal is not in harmony with the recommendations of the majority of the Committee. They said that they thought that as soon as possible, the amount of the Sinking Fund should be increased to £75,000,000. On the other hand, they did say that they did not think it was possible to do it at once. It may be that the Chancellor is counting on such a reduction in the interest charges that he will arrive at their figure, but their idea was that in the next year or two the figure of £50,000,000 ought to be raised to £75,000,000. The first question that comes up is how far debt of this kind is a burden. That is discussed very interestingly by both the Majority and Minority Reports, and views are expressed there which are views held by some of us according to the side of the House on which we sit. We all recognise that an external debt is the most serious kind of debt that we have to face, as it means a distinct drain of goods away from this country year after year for the payment of interest and debt charges. In regard to the internal debt, the question to be considered is what is the effect upon the citizens of this
country of taking a large sum of money by taxation in order to pay the service of the debt? The Minority Commissioners considered that a debt of this kind in all probability tended to increase, prejudicially from their standpoint, the difference in the distribution of wealth in this country. The Majority Commissioners expressed no opinion. The most important question is the way in which the money is to be raised. If you impose taxation upon tea and sugar in order to raise an extra £25,000,000 definitely for these purposes, that money is then handed over to those who are holders of Government stock, and in all probability it will mean that you are transferring money from the pockets of the poorer sections of the people to those who are better off. If, on the other hand, you do the reverse process, and to take an extreme example, take the money purely from the Super-taxpayers, it is obvious that it would transfer the money from the pockets of those who were very well off to the pockets of those, a large number of whom belong to that section of the population which is prosperous. The crux of the position in the collection of debt is really the problem of where the money is going to be raised.
There is one other point in connection with the Chancellor's proposal upon which I should like to lay stress, and that is why I object to a fixed amount being set aside. Supposing there were a distinct change in the rate of money. Anything is possible at the present time. The rate of money in this country is much more dependent upon the gold position of the world than the actual position in this country. We may have an alteration in the value of money apart from any increase in prosperity. Suppose it was possible in the next four or five years, to have a conversion loan issued which would reduce the debt charges, so as to give the Chancellor something like 30 or 40 millions of money. I am not desirous at this moment to see that money at once put towards the redemption of the debt. I think that it is very doubtful whether, in view of the great social schemes that are necessary a larger Sinking Fund than £50,000,000 is desirable. I know that I differ in this from the Minority of the Colwyn Committee, some of whom were connected with the party sitting on these benches,
and who are in favour of a £100,000,000 Sinking Fund. With the amount of money that is needed for social services, we should not earmark at this time so large an amount of money as is proposed by the Chancellor. The matter is one in which the Chancellor has taken a leaf out of the past. For many years it worked; for many years Chancellors of the Exchequer left the scheme alone. I do not think that we are sufficiently settled to adopt the proposal now, because we are so near to the great upheaval of the War, and we have a vast number of social problems still unsolved. On these grounds I shall vote against the proposal of the Chancellor.

Mr. CHURCHILL: The well-informed speech to which we have just listened has placed the Committee in the middle of this complicated and at the same time interesting subject. I have a difficult situation to face, the seeds of which were sown in the days of my predecessor. In the first place, undoubtedly, we have had to pay a higher rate for Treasury bills in late years than was the case four years ago. In the second place, Savings Certificates, as: I explained when introducing the Budget, which are a most valuable vehicle of public thrift, are now coming back to the Exchequer for encashment, not so much in increasing numbers, but with a much longer period of interest in their mouths, as it were. They return with eight, nine or 10 years' interest, instead of four, five or six years which they carried in the days of my predecessor. In consequence, I have had to face very largely increasing claims for Savings Certificates interest on the annual revenue. That being so, it was necessary to examine the whole position of the Savings Certificates, and, on investigation, it was found that the payment of, I think it is, £21,500,000 a year would be a fair measure of the real liability which we were incurring and had incurred. Obviously, the extent to which that liability was not being provided for has always constituted a deduction from the nominal figure of the New Sinking Fund. We had not in our Budget accounts presented that fact clearly to the world. I think the hon. Gentleman drew attention to it. If was mentioned in several of our Debates and the whole matter was brought before the Colwyn Committee. I will not say that they approved, but
they acquiesced in it in all the circumstances. The difference between this sum and the amount actually paid should have been subtracted every year from the nominal amount of the New Sinking Fund. I have now accepted this burden, which was greater than that which my predecessor the right hon. Gentleman the Member for Colne Valley (Mr. Snow-den) was called upon to pay. I was faced with the prospect of encashments carrying interest of between £15,000,000 and £20,000,000, and perhaps larger figures in future years.
That being so, I felt bound to review the whole position of our New Sinking Fund. It was really not worthy of our credit to go on providing a nominal Sinking Fund of £50,000,000 in face of these fresh borrowings each year. I preferred to regularise the proceedings, and to set aside a sum equal to the new liability incurred. At the same time I thought it would be a wise measure, sound in itself, and based upon respectable precedents, while at the same time not imposing too heavy a burden on the taxpayer for the actual debt charge, if we reverted to the old principle of an accumulating fixed debt charge. I find I did more than justice to Mr. Gladstone in the matter in opening the Budget, because Mr. Gladstone, although he had opposed the method of the accumulator, afterwards for many years carried it out. As is so often the case, though he opposed it in Opposition, he for many years subsequently followed the policy when in office.
As far as the principle of the accumulator is concerned, there is no doubt that, after it has run for a certain number of years, the favourable position created is such that, human nature being what it is, there is always a danger of those lapses from financial virtue which have been so properly stigmatised as raids. I cannot myself visualise accurately a situation where the Government in 1978 will be providing £355,000,000 for the service of the debt, while knowing that the Government of 1979 will not have to provide a penny. That is hardly how it will work. But still I believe it will be a very good guide within the lifetime of many of us here if we push ahead with a figure of £355,000,000 a year. That is an impres-
sive figure, nearly £1,000,000 a day, and I see, from comments which have reached me from many parts of the world, that the decision to adopt this course in our generation and to make an absolutely sincere effort to rid ourselves of this burden of debt within a period covered by the lifetime of most of us in this Chamber has created a marked impression of the strength and permanent stability of British financial policy.
The hon. Member pointed out, however, that if, for the first time in my experience, any piece of good fortune came my way in the shape of a substantial fall in the rent of money, and we were able to convert our debt from the present basis to a 3½ per cent. basis—that is a contingency which must be looked for, it will almost certainly come as the years pass by—that then this fixed debt charge would absorb the relief which might otherwise have gone to the taxpayer. That certainly is not my intention. I made a specific declaration to the contrary. The £355,000,000 a year wipes out all our indebtedness, external and internal, in a period of 50 years on a 4½ per cent. basis, and nothing is credited to the growing accumulator except the extinction year by year of blocks of debt through the operation of the Sinking Fund. No account has been taken of the possible diminution in the rent of money, and if it should happen that the happy circumstance to which he has referred should arise in the future, I have always contemplated that that would be a windfall which the Chancellor of the Exchequer would be fully justified in devoting to the relief of taxation. There would be a recalculation. What would happen? Supposing we were to convert our debt to a 3½ per cent. basis and save £30,000,000 or £40,000,000. It may be more—£50,000,000 or £60,000,000—I have not the exact figure in my mind. Then a recalculation would be made of the amount necessary to obliterate the total debt within the limits of the original 50 years' period, and the figure of £355,000,000 would be reduced accordingly. I should think that would be the right and proper way of dealing with the situation, supposing we had a windfall. What we are aiming at is the extinction of the debt in 50 years. That is the target, and if a smaller sum sufficed to do it, owing to a fall in the rent of money,
that smaller sum would be a perfectly legitimate figure for the Government of the day to fix.
Let us now look at the question of how the accumulator works. The principle of the accumulator is that, first of all, we pay out of the £355,000,000 the interest and the management charges on the debt, apart from Savings Certificates. In the second place, we pay the specific Sinking Funds, which now amount to £50,600,000 a year. In the third place, we pay the interest on the Savings Certificates which are actually encashed in the year. In the fourth place, we pay the Depreciation Fund on 5 per cent. and 4 per cent. War Loans, if any. These are Loans to which a Fund is attached contingent upon their falling below a certain level of prices. It only comes into operation when the price of either loan in the market falls below the appropriate figure. Of course, the Finance Branch of the Treasury so manipulates, if I may use the word, or would always be ready so to manipulate the Fund, as far as they could, to keep the loans up to those figures. They are perfectly entitled to purchase stock to keep up credit and prevent the Treasury incurring further liability. But once that liability has been incurred, then that is the fourth charge upon the £355,000,000. If there is any surplus left over, after all these charges have been met, that is devoted to the general purposes of redeeming debt. Although it begins small, it will grow each year until finally it becomes an immense sum, eating up great chunks—I beg pardon; I must be careful what words I use—great sections of this debt each year.

Mr. SNOWDEN: I have not taken part in the discussion, but may I intervene to ask a question? The Chancellor of the Exchequer is making an extremely interesting and lucid statement, but may I ask him what is included in the figure of £50,600,000? That, I assume, includes the American debt and the sums that are allocated to the debts which have specific Sinking Funds attached.

Mr. CHURCHILL: That is a very-proper question to ask. There are a number of our loans to which specific Sinking Funds are attached, and these, of course, constitute part of the obligation of the Government towards the ser-
vice of those loans. Gradually they have increased. In my time, a new 4 per cent. stock has been created to which a £10,000,000 a year Sinking Fund is attached. The £50,000,000 Baldwin Sinking Fund had been largely absorbed by these different Sinking Funds and before I made this recasting of the debt charges, about £47,000,000 was in fact already earmarked to what I may call contractual Sinking Funds. Therefore, we have very little free margin. There was also disclosed in the present Budget what were called invisible Sinking Funds which arise from the interest on the Victory Bonds in the hands of the National Debt Commissioners and repayment of certain Dominion Loans to us. The Victory Bonds, at any rate, when transferred into the public accounts in the new form, also constitute a further lien, as it were, upon the Sinking Fund as the money originally charged to the Budget as interest on these Bonds has in future to be found in the same way as the contractual Sinking Funds. Thus we reach the broken figure, of £50,600,000. Anyhow, that money has to be found and, if it were not found in any year, it might be argued not merely that we were not balancing the Budget, but that we were reducing the security on which the public creditor has relied hitherto.
I was about to say that the accumulator of £355,000,000, reinforced by the £14,000,000 liberated by the amalgamation of the note issues in the present year, is sufficient, over the six-year period up to 1933, to provide an average of £71,750,000 a year for the Sinking Funds and the Savings Certificates together. I take the year 1933 because that year covers a new burden which we shall have to bear. We have to look forward in that year to an additional £5,000,000 payment to the United States of America, and therefore I took a six-year period in order that this adverse factor should come into our calculations. But, in spite of this adverse factor, and overriding this adverse factor, we maintain over the six-year period £71,750,000 for the Sinking Fund and the Savings Certificates. The specific Sinking Funds requires something over £50,000,000, leaving £21,500,000 a year available for interest on the certificates. That figure is slightly in excess of the actuarial requirement. I stated it wrongly a moment ago. It is estimated that the Savings Certificates
will require £20,250,000 per annum on the average over the next six years.
Thus we shall be maintaining over that period, a difficult period, and after taking into consideration this impending addition to the American debt charge the strict statutory and specific Sinking Funds and, in addition, providing the whole of the interest on the Savings Certificates. An amount like £355,000,000 is a gigantic sum for the taxpayer to provide year after year, and I am not aware of any country in the world which at any time can show any effort of financial rectitude equal to that. No doubt the right hon. Gentleman the Member for Colne Valley will find fault with me for not making the amount bigger, but it is possible to go too far in those matters at any given time. The average for the period 1928–1933 is £71,750,000. I do not in the slightest degree contrast that in an invidious sense with the provision made by the right hon. Gentleman the Member for Colne Valley, but undoubtedly we are making a greater effort than the right hon. Gentleman was called upon to make in 1924 because the figure this year is £78,500,000 as against £57,000,000. This £57,000,000 is calculated after giving full credit for the invisible sinking funds in his year and it is made up by £45,000,000 New Sinking Fund, £7,000,000 Savings Certificates interest, £3,250,000 for Dominion loan repayments and £1,750,000 for Victory Bonds interest.
I am not in the least attempting to claim any exceptional virtues in this respect, and I shall not do so unless I am attacked. There are people who have endeavoured to confront me with a very awkward argument. They say, on the one hand, that I have not provided enough Sinking Fund, and, on the other hand, when I have increased the Sinking Fund they ask, "Where is all your economy in expenditure?" I have tried to steer a middle course between those two extremes. I think the right hon. Gentleman the Member for Colne Valley in one of his criticisms which he made earlier in our Debates was led into a slip which is quite understandable when one thinks of the complication involved in these propositions and how difficult it is to follow the whole policy which is involved. The right hon. Gentleman sug-
gested that the amount of the Sinking Fund in the six years would be reduced by about £20,000,000. His actual figures were £51,000,000 for Sinking Funds, £14,000,000 for Savings Certificates and £304,000,000 for other interest, making a total of £369,000,000. The fallacy, if I may-say so, is that the £304,000,000 includes £13,600,000 for Savings Certificates growing in subsequent years. Consequently £14,000,000 had been counted as an adverse factor twice over, but, making allowance for that, the figures are exactly as I have stated. As a matter of fact, we are paying our full Statutory Sinking Funds, and in addition we are providing the full actuarial charge for Savings Certi-cates interest.

Mr. PETHICK-LAWRENCE: The Chancellor of the Exchequer has defended his proposal in such a mild and conciliatory spirit, that I have a certain amount of compunction in bringing some purely natural criticisms to bear upon some of the facts and figures which he has given. In order that I may come straight away to my main objections, I will put the gravamen of my charge in this form. In the Financial Statement the National Debt Sinking Fund is put at £65,000,000 for the present year. I maintain that when all the real facts are taken into account, the true Sinking Fund for the present year is not £65,000,000, but £38,000,000, and that the figure for next year will be something of the same nature.

Mr. CHURCHILL indicated dissent.

Mr. PETHICK-LAWRENCE: The right hon. Gentleman shakes his head, but I will develop the grounds on which I think the Sinking Fund should be £38,000,000 instead of £65,000,000. The whole finances of the nation have been window-dressed by the Chancellor of the Exchequer in order to produce the favourable effect he wants to create in the minds of the public, and it is our business to pick that window-dressing to pieces in order to disclose the actual facts. How did this £38,000,000 become £65,000,000?—I think the first step taken was, perhaps, the most audacious which it was possible to imagine. It relates to the Savings Certificates. For years the method of accounting has been on an entirely wrong basis. I am not accusing the present Chancellor of the Exchequer
of that, because he merely followed the practice of a predecessor, and he now admits that the accounting of the Savings Certificates was on an entirely wrong basis, and he has told us that in the future an entirely different method is going to be followed. The Committee will hardly credit that in calculating this figure of £65,000,000 the Chancellor of the Exchequer does not adopt the new revised and correct method, but he proceeds precisely on the old methods which he now admits to be false. The £65,000,000 is only obtained by taking £13,000,000 as the estimate for the interest on the Savings Certificates for the on-coming year, in place of the figure he now admits to be correct of £20,250,000, and that shows that £7,250,000 has been incorrectly stated.
Now I come to the Chancellor's invisible Sinking Fund with which, he says, we ought to have been credited all the time, when, as a matter of fact, the money has been applied to reduce debts. But, he says, we have been so honest that we have not included them as part of the Sinking Fund. The largest item in this £6,500,000 is for the repayment of some of our Colonial debt. I think on this matter the Chancellor of the Exchequer made a little slip, because he referred to it as payment of interest.

Mr. CHURCHILL: I should have said the repayment of loan.

Mr. PETHICK-LAWRENCE: As a matter of fact, it is repayment of loan. I put it to any hon. Member who has a knowledge of business, supposing they have book debts which are worth so many thousands of pounds, and they have so many debts which they owe, and by the recovery of a certain amount of book debts they can pay off a certain amount of their debts, can that be regarded as a reduction of the liabilities of their business? That is merely a reduction of assets and a reduction of liabilities at the same time, and to say that we reduce our assets by the amount owing to us by our Colonial debtors is a misuse of words. It is simply a cancellation of assets against that liability, and therefore it is wholly improper to count it as part of the Sinking Fund. With regard to the interest on the Victory Bonds, I am not quite so clear, because I am not certain what it means. I know we have taken in discharge of Death Duties a
certain amount of Victory Bonds, and as the interest has accrued we have also taken the interest. Now the Chancellor of the Exchequer proposes that we should use that to cancel our debts, and we should take credit to ourselves for that as part of the Sinking Fund. I say that it is nothing of the kind, and that item ought to be deducted from the Chancellor of the Exchequer's view of what it ought to be. These two items together account for £6,500,000, in addition to £7,250,000 on account of the Savings Certificates, or £13,750,000 in all.
I come to the last item, which is the amount added to the provision on account of the change made in the currency. I was glad to hear the Chancellor of the Exchequer admit that this was in fact a bookkeeping transaction. That is what I have maintained from the beginning, although some hon. Members on the Government Bench have stood out against that view, and have contended that it was a real contribution to the Sinking Fund. Now that the Chancellor of the Exchequer has admitted that fact, it is not necessary for me to argue the matter any further. But while the amount cancelled was nominally part of the debt, as the debtor himself held the stocks representing that amount, there is no real gain when the bookkeeping transaction is carried out of cancelling what a men owes to himself. This bookkeeping item amounts to £13,200,000, and including the other items would reach a grand total of £27,000,000. Taking £27,000,000 from £65,000,000, you get £38,000,000, which is the real figure at which the Sinking Fund stands at the present time. When we appreciate this we realise that both for this year and for next year the statutory and specific Sinking Funds are not covered to an amount of several millions. We find that anything up to £12,000,000 for these two years the statutory Sinking Funds are not really being covered at all. They are only being met, theoretically, partly because the full amount required to meet the interest on savings' certificates is not actually paid out in any given year, and partly by other fictitious methods which are not strictly paying off debt at all. What we are really doing is this: we have on paper certain statutory specific Sinking Funds, and we only succeed in carrying out our obligations by
fresh borrowing. Our position, therefore, in spite of all the defence of the Chancellor of the Exchequer, is entirely different from that which he professes it is.
He attempts to cover this up by a kind of posthumus virtue. He admits, when he really comes down to the hard facts of the situation, that in these present two years we are not quite meeting what he considers to be necessary, but he throws in four years after his present tenure of office. Whatever hopes he may have—and I would remind him of his own statement in this Chamber that optimism is not the sole requisite of prophecy—whatever hopes he may have of obtaining a further tenure of office, he is simply resting himself on the supposition that his successor will carry out the proposals which he is putting forward, and he only covers the present two years by dragging in these four later years, when, according to his hypothetical estimates, the total may be reached.
I do not like this Clause. I do not like it because it covers up the true facts of the case. It obscures from the eye of the public in this country what is really happening with regard to the national finances, what is really taking place with regard to the provision for reducing debt. On paper, as exhibited by the Financial Statement for the year, we have a Sinking Fund of £65,000,000. Everyone would suppose that that meant that debt was being reduced by that amount. I have shown that the real amount by which the net debt of this country is being decreased is something like £38,000,000, even on the favourable assumption of the Chancellor of the Exchequer that the interest on the floating debt will not reach anything like the figure that it reached last year. If it were otherwise—if, instead of the £304,000,000 estimated for, the figure for last year, namely, close on £,314,000,000, were reached—then the figure of £38,000,000 which I have given would be cut down by an amount that might be a still further £10,000,000. Even on the favourable assumption of the Chancellor of the Exchequer, his boasted £65,000,000 is really £38,000,000.
I do not like that method of finance, and I do not believe that people who are accustomed to straight and clear ac-
counting will like it either, when they come to examine the facts. The Chancellor of the Exchequer seems to me to be like a man who is boosting a private business or a company in order to gain credit in the public eye. He starts with a little manipulation of the figures in order to make them more presentable to the public. He goes on, in his confidence and audacity, increasing these manipulations until they become exceedingly questionable, and in private life, if he uses this method for his own private advantage, he ultimately finds himself in prison. The counterpart of that in public finance is to mislead the public as to their true affairs, and when, with increasing audacity, these manipulations have gone to the point of totally misrepresenting the real facts of the situation, I believe that, while the public opinion of this country will not inflict physical imprisonment on the Chancellor of the Exchequer, it will see to it that he is dismissed from the high office which he holds at the present time.

CLAUSE 19.—(Suspense account.)

The CHAIRMAN: The Amendment standing in the names of the hon. and gallant Member for Oxford (Captain Bourne) and of the hon. and gallant Member for Hitchin (Major Kindersley)—at the beginning of the Clause to insert the words:
In order to provide a Reserve Fund for the purposes of any Act or Acts of the present Parliament to make provision for the relief of rates"—
is out of place.

Mr. GILLETT: I beg to move, in page 14, line 29, to leave out the word "years," and to insert instead thereof the word "year."
There are two other Amendments on the Paper in the names of my hon. Friends the Members for Keighley (Mr. Lees-Smith) and East Bristol (Mr. W. Baker) and myself—in page 14, line 30, to leave out the word "respectively," and, in line 31, to leave out the words "and the thirty-first day of March, nineteen hundred and twenty-nine"—and the three Amendments taken together would make the Clause read:
The old Sinking Fund for the year ending on the thirty-first day of March, nine-
teen hundred and twenty-eight, shall, instead of being issued to the National Debt Commissioners "—
and so on. I want briefly to point out two principles which, as it seems to me, the Committee have to consider in connection with the proposal which the Chancellor of the Exchequer is making here. One of these principles the Amendment which I am now moving certainly does not challenge. I might remind the Committee that the practice in regard to national finance as it has been carried out, certainly by the Conservative party, for many years, and the idea of the Conservative financiers, was based upon, amongst others, two distinct principles. The first of these was that, in justice to the taxpayer, the money that was being raised in one year should not exceed the amount that was needed for the actual expenditure of the year for which the accounts were going to be paid. The second principle, which has become part of our financial system, is found in the custom which has grown up, and which as a matter of fact has also been recognised by law, that if the Chancellor of the Exchequer, in making his Estimates for the year, is pleasantly surprised at the end of the year to find that, either by an increase of income or a diminution of expenditure, he is left with a balance in hand, that sum of money should he used for the sinking fund.
These are the two great principles which certainly have always been recognised by the Conservative party, and, therefore, it is one of the peculiarities of the present situation that it is the Conservative party, led by the Chancellor of the Exchequer, who are now throwing over these two important principles of finance. As far as I can see—so far at any rate as these Debates are concerned—the only hon. Member opposite who has made any protest against that has been the hon. Member for the City of London (Mr. E. C. Grenfell), who, on I believe two occasions, has voiced his opposition to one of these proposals. He is not here at the moment, so the Chancellor of the Exchequer need not be nervous or anxious this afternoon, if that is what is causing him to look round.
The first proposal of the Chancellor of the Exchequer is that he asks the Committee to allow him to put the sum of
£4,000,000 odd, which was his surplus last year, to a special account. As we all know, that special account is to be used in connection with the new rating scheme, but it is not the use that is going to be made of this money that comes before us at the present time, but the fact that, in spite of this principle, recognised by Chancellors of the Exchequer year after year almost without exception, that such money should be used for Sinking Fund purposes, it is now going to be diverted to another purpose. Chancellors of the Exchequer who may represent this party are not usually supposed to be quite so orthodox in finance as those who represent the Conservative party, but as a matter of fact at the present time we are in the extraordinary position that the orthodox financier is the ex-Chancellor of the Exchequer, who sits on this side, and the unorthodox financier is the right hon. Gentleman who is at present Chancellor of the Exchequer; and, to judge by events, public opinion might imagine that matters were reversed, and that my right hon. Friend was sitting where the present Chancellor of the Exchequer is, while the present Chancellor of the Exchequer has the mind and outlook of a Socialist Chancellor of the Exchequer, looking for money for his Socialist schemes, and going anywhere and everywhere to get money—at any rate, that is the public idea of a Socialist Chancellor of the Exchequer.
If in years to come Chancellors of the Exchequer make these raids on surpluses, they will always be able to justify them by the action of the present Government, and also by the action of the right hon. Gentleman who was Chancellor of the Exchequer in the Coalition Government, and who stood up in his place a few weeks ago to support the present Chancellor of the Exchequer in this special proposal, and said that the end justified the means. Of course, as I pointed out on another occasion, every Chancellor of the Exchequer who wants to attack the Sinking Funds would say exactly the same, namely, that the end justifies the means. For myself, I rather believe that this principle of the surplus for the year being allocated to Sinking Fund purposes, which was so dear to Gladstone and all the great Chancellors of the past, may be looked upon as a dead letter. The Chancellor of the Exchequer will notice
that in our Amendments we are not suggesting any alteration as far as that is concerned; we are allowing him to make this precedent, thinking that possibly it may be a very useful precedent to soma Labour Chancellor of the Exchequer in years to come.
6.0 p.m.
I now come to the other side of the question, and that is that the Chancellor of the Exchequer has committed a second great sin against the principles of Conservative finance in the fact that he is raising, during the present year, a sum of money which he is deliberately allowing to accumulate in order to spend it in the years that are to follow. As I said before, the question is not whether the purpose is good or bad. Every Chancellor of the Exchequer will say that the purpose he has in mind is a good purpose. The fact is that a sum of £14,000,000 or £15,000,000 is being taken out of the pockets of the taxpayers this year for purposes for which it is not required this year. I do not know whether there has ever before been anything similar to the proposal which the Chancellor of the Exchequer is bringing forward. It is a most revolutionary proposal. If it had been brought forward by the Labour party, every financial paper in the City would have been up in arms against it, but seeing that the Chancellor of the Exchequer sits on that side, most of the financial papers seem not to be making any great protest against it. It is a very serious principle, because if we are going to institute a custom by which the Chancellor can accumulate funds for the year following, it really affects the whole of our taxing system. It means that a man may be asked to pay taxes in a year when perhaps he is not specially prosperous, for expenditure that is to take place next year when perhaps in altered circumstances he might be in a better position to meet the need. It seems to us that some protest should be made, and we ought to have some full defence before we agree to this innovation in the principles of our public finance.

Mr. CHURCHILL: I will not go so far as to propound the principle that the end justifies the means, but if the end is desirable and if the means are innocent, one may safely, perhaps, with those reservations, trust oneself to the saying.
I am sure the Committee will agree that both those qualifications are present in the existing circumstances. What is the end at which we are aiming? Whatever differences there may be about the rating scheme, at least we are making a great remission of taxation. It is not a new burden or a new expenditure that we are contracting. It is not a new extravagance of any kind. The very large sums of money that are required for the rating scheme are essentially a remission of taxation—I am not saying whether it is wisely applied or not—a remission of peculiarly invidious taxation. And no one can deny that the remission of taxation is desirable in itself. The question of the means then falls to be considered. What means could be more innocent, and indeed commendable, than, after having made adequate provision for the discharge of the liabilities of the State and for the amortisation of its debts, such provision being on a scale far greater than was attempted by any previous administration, to save up the year's surplus for the purpose of giving that remission of taxation in itself so desirable and bring it about at the earliest possible date? In that sense the statement that the end justifies the means is fully to be defended in the present circumstances, with these qualifications. The hon. Member has criticised both the carrying forward into the future of the old Sinking Fund surplus of last year, and the holding of the accumulated surplus of this year in a suspensory fund. But if I were not to take that step, I do not think I could make a proper arrangement for bearing the expense of the scheme.
There is no doubt that the relief of taxation which will come through the rating scheme will substantially exceed, now that the Kerosene Duty has been dropped, and that it has appeared that certain increases in the grants to local authorities shortly to be announced are inevitable, the new revenue from the Petrol Duly, and it is only because I shall have in hand this accumulated fund made up of the prospective surplus for this year and the realised surplus of last year that I am able to see my way to financing the whole of this scheme over the next three years for certain. I hope and trust better days will come during that period and that we may stimulate and accelerate their advent, in which case
the normal growth of our revenue and the recovery of our trade, the decrease of our expenditure and the diminution of unemployment, will place us after three years in a position much more favourable than that in which we are at present. I desire, as far as I possibly can, to make the proposal one that does not unduly mortgage the revenue of the future, responsibility for the administration of which may fall to others. I have said I am considering the position in which the Government might conceivably find itself and endeavouring to make sure that they are not left with a future so far mortgaged that they have no reasonable latitude in which to move, and therefore I must ask for this easement both for the past old Sinking Fund and for the surplus of this year. This does not involve any impingement upon Parliamentary control. This Suspensory Fund will be entirely in the control of Parliament at every stage of its existence. If the House should think it right at a later stage next Session or in the year after, to take this Suspensory Fund and devote it to the further repayment of debt and to raise the additional money required for rating relief by other forms of taxation, or if happily it should find itself possessed of resources which I do not enjoy, there is nothing to prevent the full discretion and the effective control by Parliament. Therefore, I feel I cannot accept the Amendment, because although the hon. Member has put his points clearly, nevertheless those points are outweighed by the purpose we have in hand and the necessity which leads us to make these provisions for accumulating in advance sums of money which will subsequently be used beneficially.

Mr. PETHICK-LAWRENCE: The Chancellor of the Exchequer has endeavoured to defend his unprecedented action by contending that his method is innocent and his object beneficial. In the first place, I would dispute that the method is innocent. There are two points involved in this. There is carrying over the surplus from 1927–28 not merely into the following year but two years in advance. That, surely, is entirely unprecedented, and it creates a situation very different from what has been done even in previous years, when sometimes a surplus has been diverted from the Sinking Fund. When that has
happened it is to a certain extent an accident whether the money has been received before 31st March or not, and there is not a very great deal of difference in its coming in in one form or in the other. But it is quite a different matter when you carry forward the balance not merely one year but two years. Then there is the second point that the Chancellor is raising some £13,000,000 or £14,000,000 this year which he is hypothecating to the relief of rates next year. That is very far from an innocent proposal. It means that the Chancellor is taking out of the pockets of the taxpayer more than he really needs, and paying it over for the extinction of debt at the moment, because that is how it will be actually used. Next year he will want more money than he can get from the taxpayer, and therefore he will have to re-borrow this £13,000,000 or £14,000,000, and thereby increase debt. So what is actually taking place is that he is creating an unequal provision for the cancellation of debt in two succeeding years. One year he is cancelling debt by £13,000,000 more than he requires, and in the next year he is having to borrow that £13,000,000 in order to meet his requirements. That is a very undesirable method indeed, and far from innocent, and may have deleterious effects on the finances of the country. The right method of dealing with the repayment of debt is, as far as possible, to make an even repayment year after year. A large payment one year and a reduction the next is a thoroughly bad plan.
Then the right hon. Gentleman says whatever may be the innocence or otherwise of the means the object is a beneficial one. What is the object of this course of action? He would have us believe it is the relief of the rates. That is not true at all. The relief of the rates could be quite properly carried out by imposing taxation for the precise year in which the money was required. That is the normal constitutional method, and if that were his true object he would take that course. His object is really an electoral one. There can be no other object. The sole object of raising it this year in order to make a remission of taxation next year is that next year he will be able to present an amazingly favourable Budget. He proposes next year to make a Budget which is unduly favourable by imposing a burden on this
year which ought to fall upon next year. That is not a beneficial object. It is not even an innocent object. In my view, it is a nefarious object, because it is in keeping with the whole of the finance of the Chancellor of the Exchequer, which is to misrepresent the financial facts to the country. Because the scheme is not innocent in its methods, because it is nefarious in its objects and because it misleads the public as to the true facts of the finance of the country I shall vote against it.

Captain BOURNE: However much we may disagree on opposite sides of this Committee as to the advantages or disadvantages or innocence of the scheme set up by my right hon. Friend, I think we shall all agree that the method which he is proposing is a dangerous one, and is a departure from our constitutional practice. In expressing this view, I am reinforced by the views of Mr. Speaker Peel, who characterised a similar proposal in 1890 as unconstitutional. It has hitherto been our practice at least since the Select Committee on Finance in 1828 that any surplus income at the end of the year should be devoted automatically to the extinction of debt. There is one solitary reason for this, namely, that it is not in the interests of the country to impose more taxation upon His Majesty's subjects than is likely to meet the expenditure. I do think that we ought to hesitate before we sanction a departure from that time-honoured practice. In the old days, it was the object of this House to prevent the Crown accumulating money so that the Crown should not be able to carry on the government of this country without reference to Parliament, and I think we have just as much business now to say that the Executive cannot carry on the Government without reference to this House.
I feel that we are opening by this practice a door which may lead to very dangerous developments. No doubt any future Government which may come into power will consider as excellent the motives for which they want to accumulate surpluses. Their ideals may be innocent, and taking this fact into consideration, they will be so conscious of their own virtue that they will feel that it is quite right to raise more taxation and put aside a surplus sum to be used for some extensive object in the future.
Such a surplus may easily be devoted to financing some scheme for catching votes at an election or something else, and one which may place a very serious burden upon the shoulders of a subsequent Government and a subsequent Chancellor of the Exchequer. It is quite easy to start-any scheme you like with a reserve fund of several millions, and to finance it for the first six months and then leave it to some subsequent Government to raise further taxation. I feel that we are opening the door to that practice by accepting this Clause, and I feel that we ought not to do so without adequate reasons.

Major KINDERSLEY: I wish to support my hon. and gallant Friend the Member for Oxford (Captain Bourne) in the protest he has just made against this Clause. There is no doubt that it is entirely established that any surplus should go to a reduction of debt. The dangers of creating the precedent which we are creating this evening if we pass this Clause are really very great, and I think they will become greater as democracy becomes real and large. After all, what is there to prevent a Government from accumulating funds and then subsequently going to the electors with a cry that they will raise money for a particular object when they have already raised the money? Suppose that, owing to certain electoral vicissitudes, this Government do not come back to office to complete their scheme, this money will be at the disposal of Parliament. That means that it will be at the disposal of the Government who are returned at the next election, and I do not want to see the election fought on the question of how this £26,000,000 is to be expended, whether on the Government's scheme—which I consider to be excellent; I am not complaining about the scheme—or on some electoral bribe. I most strongly ask the Committee to think twice before they create a precedent such as this, and I do ask the Government—I understand that the words proposed in the Amendment put down by my hon. and gallant Friend the Member for Oxford and myself, are not in order—to insert some appropriate words before we come to the Report stage, so that this money may be definitely earmarked for the scheme that they have in view, and that if that scheme is not carried out, it will go automatically to the reduction of debt.

Mr. A. V. ALEXANDER: One cannot fail to recognise the obvious sincerity of the comments which have just fallen from the two hon. and gallant Gentlemen on the other side. That they are sincere in this matter is proved by their attempt to deal with it in the Amendment which they placed upon the Order Paper. It would be interesting to see how many of their hon. Friends they can persuade to go into the Division Lobby in support of the Amendment moved by my hon. Friend the Member for Finsbury (Mr. Gillett). The basis laid down by the hon. and gallant. Member for Hitchin (Major Kindersley), and, indeed, by the hon. and gallant Member for Oxford is, of course, absolutely sound. The net result is, as was indicated by my hon. Friend the Member for West Leicester (Mr. Pethick-Lawrence), that we shall really be taking £13,000,000 or £14,000,000 from the taxpayers this year above what is required in respect of the Chancellor's present proposals during the current financial year.
Apart, entirely from the general question of finance, which has already been explained to the Committee, surely we ought to be able to press upon the Government that if they are going to take this extra £13,000,000 or £14,000,000 this year, they ought to be amending their proposals so that the relief to industry comes in the present year and not next year. Wherever you look to-day, you find that British trade is in serious difficulties, and at this time, when trade is in such a serious position, you are going to collect this money and say to them, "Perhaps in 15 or 18 months' time we shall give some of it back to you in some other direction." The Chancellor of the Exchequer said that he hopes that within a short time the details of the Government's scheme of block grants to local authorities will be made available. We ought to have those particulars made available to us before we discuss the question of raising the money in the financial year, and ought to know how the revenue when raised is actually to be distributed.
The Chancellor's statement that the matter will be perfectly safe and that the money will be carried to a suspensory fund, and that that suspensory fund will always be at the disposal of the. Government, really gives us very little consola-
tion. We certainly do not trust the present Chancellor of the Exchequer with money held in such a fund as that. We know his great capacity as a marauder, as a pirate when there is any money of that character about. He has raided the Unemployment Insurance Fund. He has raided the National Health Insurance Fund. There is the Minister of Transport sitting on the Bench opposite. He was unable to prevent the Chancellor of the Exchequer taking over £20,000,000 from the Road Fund. It is of very little satisfaction to us to be told that this money is going to a suspensory fund, and that therefore it will always be at the disposal of Parliament. What that means is, of course, that it is at the disposal of whoever in in charge of the Treasury for the time being, and the real danger, therefore, is the danger which has been pointed out to the Committee by the hon. and gallant Member for Oxford and the hon. and gallant Member for Hitchin. They put their case from their point of view quite plainly, and I think we on this side of the Committee ought to welcome the fact that apparently there are some Members of the Conservative party who do not want this kind of thing to be used as an election cry. It will be interesting to see how many hon. Members they can persuade to follow us into the right Lobby on this very important issue.

Sir JOHN MARRIOTT: I wish to associate myself with the protest which has been made by my two hon. and gallant Friends on this side of the Committee and also to associate myself, if I may, wish the practical and constructive suggestion which fell from the hon. Member for Hillsborough (Mr. A. V. Alexander) in the course of the remarks which he has just addressed to the Committee. I feel with my hon. and gallant Friends on this side of the Committee that there is a strong constitutional objection to be taken to the proposal of the Chancellor of the Exchequer. But I am myself so strongly in favour of the general scheme of this Budget; I am so anxious that nothing whatever shall be done to impede the general scheme and that nothing shall be put in the way of the Chancellor of the Exchequer carrying out his large scheme for the relief of the basic industries of this country, that I, personally, shall hesitate
to do anything which will impede it. The hon. Gentleman opposite seems to have made a practical suggestion which I very much wish the Chancellor of the Exchequer would take into serious consideration. As I understand the proposal, it is that the money which is now under question, instead of being paid into a suspensory account should, during the current financial year, be expended on the objects which the Chancellor of the Exchequer has already explained to the Committee. Speaking for myself, and without any opportunity of consulting any of my hon. Friends on this side of the Committee, that seems to be a perfectly sound suggestion, and one which, on its merits, ought to receive very serious consideration from the Chancellor of the Exchequer.
I am sorry that my right hon. Friend the Member for Hillhead (Sir E. Horne) has just left the Committee, because, as I understand the speech which he delivered at an earlier stage of our discussions

on the Budget proposals of this year, this was precisely the suggestion which he made to the Chancellor of the Exchequer, namely, that instead of reserving a sum which would amount to £26,000,000, or whatever it might be, for use in 18 months' time, something should be paid on account during the current financial year, possibly in the relief of railway freights, or on any other selected object which the Chancellor of the Exchequer might choose for himself. I do not want to detain the Committee for more than a minute or two. I merely wish to commend to my right hon. Friend the Chancellor of the Exchequer the constructive suggestion which has fallen from the hon. Member opposite, and which was advanced at an earlier stage in our discussions by my right hon. Friend the Member for Hillhead.

Question put, "That the word 'years' stand part of the Clause."

The Committee divided: Ayes, 231; Noes, 127.

Kinloch-Cooke, Sir Clement
Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld.)
Smithers, Waldron


Lane Fox, Col. Rt. Hon. George R.
Nicld, Rt. Hon. Sir Herbert
Spender-Clay, Colonel H.


Lister, Cunliffe, Rt. Hon. Sir Philip
Nuttail, Ellis
Sprot, Sir Alexander


Lloyd. Cyril E. (Dudley)
Oakley, T.
Stanley, Lieut.-Colonel Rt. Hon. G. F.


Locker-Lampson, Rt. Hon. Godfrey
O'Neill, Major Rt. Hon. Hugh
Stanley, Hon. O. F. G. (Wastrn'eland)


Locker-Lampson, Com. O. (Handsw'th)
Penny, Frederick George
Streatfeild, Captain S. R.


Loder, J. de V.
Perkins, Colonel E. K.
Stuart, Hon, J. (Moray and Nairn)


Lougher, Lewis
Perring, Sir William George
Styles, Captain H. Walter


Lucas-Tooth, Sir Hugh Vere
Peto, Sir Basil E. (Devon, Barnstaple)
Sugden, sir Wilfrid


Luce, Major-Gen. Sir Richard Harman
Peto, G. (Somerset, Frome)
Tasker, R. Inlgo.


Lumley, L. R.
Pilcher, G.
Thom, Lt.-Col. J. G. (Dumbarton)


Lynn, Sir R. J.
Preston, William
Thompson, Luke (Sunderland)


MacAndrew, Major Charles Glen
Radford, E. A.
Thomson, F. C. (Aberdeen, South)


Maclntyre, Ian
Ralne, Sir Walter
Thomson, Rt. Hon. Sir W. Mitchell-


McLean, Major A.
Ramsden, E.
Tinne, J. A.


Macmillan, Captain H.
Rawson, Sir Cooper
Titchfield, Major the Marquess of


Macnaghten, Hon. Sir Malcolm
Richardson, Sir P. W. (Sur'y, Ch'ts'y)
Tryen, Rt. Hon. George Clement


MacRobert, Alexander M.
Roberts, E. H. G. (Flint)
Waddington, R.


Makins, Brigadier-General E.
Robinson, Sir T. (Lane., Stretford)
Wallace, Captain D. E.


Manningham-Buller, Sir Mervyn
Rodd, Rt. Hon. Sir James Rennell
Ward, Lt.-Col. A. L. (Kingston-on-Hull)


Margesson, Captain D.
Ropner, Major L.
Waterhouse, Captain Charles


Marriott, Sir J. A. R.
Ruggles-Brise, Lieut.-Colonel E. A.
Watts, Sir Thomas


Mason, Colonel Glyn K.
Russell, Alexander West (Tynemouth)
Wayland, Sir William A.


Milne, J. S. Wardlaw-
Rye, F. G.
Wells, S. R.


Mitchell, S. (Lanark. Lanark)
Salmon, Major I.
White, Lieut.-Col. Sir G. Dairymple.


Mitchell, W. Foot (Saffron Walden)
Samuel, A. M. (Surrey, Farnham)
Williams, Com. C. (Devon, Torquay)


Monsell, Eyres, Com. Rt. Hon. B. M.
Samuel, Samuel (W'dsworth, Putney)
Withers, John James


Moore, Lieut.-Colonel T. C. R. (Ayr)
Sandeman, N. Stewart
Womerslev, W. J.


Moore-Brabazon, Lieut.-Col. J. T. C.
Savery, S. S.
Wood, E. (Chest'r, Stalyb'dge & Hyde)


Nelson, Sir Frank
Scott, Rt. Hon. Sir Leslie
Worthington-Evans, Rt. Hon. Sir L.


Newman. Sir R. H. S. D. L. (Exeter)
Shepperson, E. W.



Newton, Sir D. G. C. (Cambridge)
Skelton, A. N.
TELLERS FOR THE AYES.—


Nicholson, O. (Westminster)
Smith, R. W. (Aberd'n & Kinc'dlne, C.)
Captain Bowyer and Sir Victor




Warrender.




NOES.


Adamson, Rt. Hon. W. (Fife, West)
Graham, Rt. Hon. Wm. (Edin., Cent.)
Ritson, J.


Adamson, W. M. (Staff., Cannock)
Greenall, T.
Saklatvala, Shapurji


Alexander, A. V. (Sheffield, Hillsbro')
Greenwood, A. (Nelson and Colne)
Salter, Dr. Aifred


Ammon, Charles George
Griffith, F. Kingsley
Scrymgeour, E.


Baker, J. (Wolverhampton, Bilston)
Groves, T.
Scurr, John


Baker, Walter
Grundy, T. W.
Sexton, James


Barker, G. (Monmouth, Abertillery)
Hall, F. (York, W.R., Normanton)
Shaw, Rt. Hon. Thomas (Preston)


Barnes, A.
Hardie, George D.
Shepherd, Arthur Lewis


Batey, Joseph
Harney, E. A.
Shinwell, E.


Bondfield, Margaret
Harris, Percy A.
Short, Alfred (Wednesbury)


Bowerman. Rt. Hon. Charles W.
Henderson, T. (Glasgow)
Simon, Rt. Hon. Sir John


Briant, Frank
Hirst, G. H.
Sinclair, Major Sir A. (Caithness)


Bromfield, William
Hirst, W. (Bradford, South)
Sitch, Charles H.


Bromley, J.
Hudson, J. H. (Huddersfield)
Slesser, Sir Henry H.


Brown, Ernest (Leith)
Hutchison, Sir Robert (Montrose)
Smillie, Robert


Brown, James (Ayr and Bute)
Jones, Henry Haydn (Merioneth)
Smith, Ben (Bermondsey, Rotherhithe)


Buchanan, G.
Jones, J. J. (West Ham, Silvertown)
Smith, H. B. Lees (Keighley)


Buxton, Rt. Hon. Noel
Jones, Morgan (Caerphilly)
Snell, Harry


Cape, Thomas
Jones, T. I. Mardy (Pontypridd)
Snowden, Rt. Hon. Philip


Charieton, H. C.
Kelly, W. T.
Stamford, T. W.


Cluse, W. S.
Kennedy, T.
Stewart, J. (St. Rollox)


Clynes, Rt. Hon. John R.
Kirkwood, D.
Strauss, E. A.


Compton, Joseph
Lansbury, George
Sutton, J. E.


Connolly, M.
Lee, F.
Thorne, G. R. (Wolverhampton, E.)


Cove, W. G.
Livingstone, A. M.
Thorne, W. (West Ham, Plalstow)


Cowan, D. M. (Scottish Universities)
Lowth, T.
Thurtle, Ernest


Crawfurd, H. E.
Lunn, William
Tinker, John Joseph


Dalton, Hugh
Mackinder, W.
Townend, A. E.


Davies, Rhys John (Westhoughton)
Maclean, Neil (Glasgow, Govan)
Trevelyan, Rt. Hon. C. P.


Day, Harry
Malone, C. L'Estrange (N'thamptom
Varley, Frank B.


Dennison, R.
March, S.
Viant, S. P.


Duckworth, John
Maxton, James
Watson, W. M. (Dunfermline)


Dunnico, H.
Montague, Frederick
Watts-Morgan, Lt.-Col. D. (Rhondda)


Edge, Sir William
Morris, R. H.
Wellock, Wilfred


Edwards, C. (Monmouth, Bedwellty)
Morrison, R. C. (Tottenham, N.)
Westwood, J.


England, Colonel A.
Murnin, H.
Wheatley, Rt. Hon. J.


Evans, Capt. Ernest (Welsh Univer.)
Owen, Major G.
Whiteley, W.


Fenby, T. D.
Palin, John Henry
Williams, T. (York, Don Valley)


Gardner, J. P.
Pethick-Lawrence, F. W.
Wilson, R. J. (Jarrow)


Garro-Jones, Captain G. M.
Potts. John S.
Wright, W.


Gibbins, Joseph
Purcell, A. A.
Young, Robert (Lancaster, Newton)


Gillett, George M.
Richardson, R. (Houghton-le-Spring;



Gosling, Harry
Riley, Ben
TELLERS FOR THE NOES.—




Mr. Allen Parkinson and Mr. Paling.

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Major KINDERSLEY: I do feel that the Chancellor of the Exchequer or the Financial Secretary to the Treasury should make some answer to the very important point which has been raised by the hon. and gallant Member for

Division No. 215.]
AYES.
[6.39 p.m.


Agg-Gardner, Rt. Hon. Sir James T.
Dean, Arthur Wellesley
Lister, Cunliffe-, Rt. Hon. Sir Philip


Ainsworth, Lieut.-Col. Charles
Dixey, A. C.
Lloyd, Cyril E. (Dudley)


Alexander, E. E. (Leyton)
Drewe, C.
Locker-Lampson, Rt. Hon. Godfrey


Allen, Sir J. Sandeman
Eden, Captain Anthony
Locker-Lampson, Com. O. (Handsw'th)


Amery, Rt. Hon. Leopold C. M. S.
Edmondson, Major A. J.
Loder, J. de V.


Ashley, Lt.-Col. Rt. Hon. Wilfrid W.
Elliot, Major Walter E.
Lougher, Lewis


Astbury, Lieut.-Commander F. W.
Ellis, R. G.
Lucas-Tooth, Sir Hugh Vere


Atholl, Duchess of
Erskine, Lord (Somerset, Weston-s.-M.)
Luce, Major-Gen. Sir Richard Harman


Baldwin, Rt. Hon. Stanley
Erskine, James Malcolm Monteith
Lumley, L. R.


Balniel, Lord
Evans, Captain A. (Cardiff, South)
Lynn, Sir R. J.


Barclay-Harvey, C. M.
Everard, W. Lindsay
MacAndrew, Major Charles Glen


Barnett, Major Sir Richard
Fairfax, Captain J. G.
Maclntyre, Ian


Bellairs, Commander Cariyon
Falle, Sir Bertram G.
McLean, Major A.


Benn, Sir A. S. (Plymouth, Drake)
Fanshawe, Captain G. D.
Macmillan, Captain H.


Bethel, A.
Flelden, E. B.
Macnaghten, Hon. Sir Malcolm


Betterton, Henry B.
Finburgh, S.
MacRobert, Alexander M.


Birchall, Major J. Dearman
Forrest, W.
Makins, Brigadier-General E.


Bird, E. R. (Yorks, W. R., Skipton)
Foster, Sir Harry S.
Manningham-Buller, Sir Mervyn


Bird, Sir R. B. (Wolverhampton, W.)
Foxcroft, Captain C. T.
Margesson, Captain D.


Boothby, R. J. G.
Fraser, Captain Ian
Marriott, Sir J. A. R.


Braithwaite, Major A. N.
Frece, Sir Walter de
Mason, Colonel Glyn K.


Brass, Captain W.
Fremantle, Lieut.-Colonel Francis E.
Milne, J. S. Wardlaw.


Brassey, Sir Leonard
Gadie, Lieut.-Col. Anthony
Mitchell, S. (Lanark, Lanark)


Briggs, J. Harold
Galbraith, J. F. W.
Mitchell, W. Foot (Saffron Walden)


Briscoe, Richard George
Ganzoni, Sir John
Monsell, Eyres, Com. Rt. Hon. B. M.


Brocklebank, C. E. R.
Gilmour, Lt.-Col. Rt. Hon. Sir John
Moore, Lieut.-Colonel T. C. R. (Ayr)


Broun-Lindsay, Major H.
Glyn, Major R. G. C.
Moore-Brabazon, Lieut.-Col. J. T. C.


Buchan, John
Goff, Sir Park
Nelson, Sir Frank


Buckingham, Sir H.
Gower, Sir Robert
Newman, Sir R. H. S. D. L. (Exeter)


Bullock, Captain M.
Grace, John
Newton, Sir D. G. C. (Cambridge)


Burman, J. B.
Grant, Sir J. A.
Nicholson, O. (Westminster)


Cadogan, Major Hon. Edward
Greene, W. P. Crawford
Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld)


Caine, Gordon Hall
Greenwood, Rt. Hn. Sir H. (W'th's'w, E)
Nield, Rt. Hon. Sir Herbert


Campbell, E. T.
Gretton, Colonel Rt. Hon. John
Nuttall, Ellis


Carver, Major W. H.
Grotrian, H. Brent
Oakley, T.


Cautley, Sir Henry S.
Guinness, Rt. Hon. Walter E.
O'Neill, Major Rt. Hon. Hugh


Cayzer, Sir C. (Chester, City)
Hacking, Douglas H.
Penny, Frederick George


Cayzer. Maj. Sir Herbt, R. (Prtsmth, S.)
Hammersley, S. S.
Perkins, Colonel E. K.


Chadwick, Sir Robert Burton
Hannon, Patrick Joseph Henry
Perring, Sir William George


Chamberlain, Rt. Hon. N. (Ladywood)
Harland, A.
Peto, Sir Basil E. (Devon, Barnstaple)


Chapman, Sir S.
Harmsworth, Hon. E. C. (Kent)
Peto, G. (Somerset, Frome)


Christie, J. A.
Harrison, G. J. C.
Pilcher, G.


Churchill, Rt. Hon. Winston Spencer
Harvey, Major S. E. (Devon, Totnes)
Preston, William


Churchman, Sir Arthur C.
Haslam, Henry C.
Radford, E. A.


Clarry, Reginald George
Headlam, Lieut.-Colonel C. M.
Raine, Sir Walter


Cobb, Sir Cyril
Henderson, Capt. R. R. (Oxf'd. Henley)
Ramsden, E.


Cochrane, Commander Hon. A. D.
Henderson, Lieut.-Col. Sir Vivian
Rawson, Sir Cooper


Cohen, Major J. Brunei
Henn, Sir Sydney H.
Reid, D. D. (County Down)


Colfox, Major Wm. Phillips
Hennessy, Major Sir G. R. J.
Richardson, Sir P. W. (Sur'y, Ch'ts'y)


Cooper, A. Duff
Hilton, Cecil
Roberts, E. H. G. (Flint)


Cope, Major Sir William
Hoare, Lt.-Col. Rt. Hon. Sir S. J. G.
Robinson, Sir T. (Lanes, Stretford)


Couper, J. B.
Holbrook, Sir Arthur Richard
Rodd, Rt. Hon. Sir James Rennell


Courthope, Colonel Sir G. L.
Holt, Capt. H. P.
Ropner, Major L.


Craig, Capt. Rt. Hon. C. C. (Antrim)
Hope, Capt. A. O. J. (Warw'k, Nun.)
Ruggles-Brise, Lieut.-Colonel E. A.


Craig, Sir Ernest (Chester, Crewe)
Hopkins, J. W. W.
Russell, Alexander West, (Tynemouth)


Croft, Brigadier-General Sir H.
Horne, Rt. Hon. Sir Robert S.
Rye, F. G.


Crookshank, Col. C. de W. (Berwick)
Howard-Bury, Colonel C. K.
Salmon, Major I.


Crookshank, Cpt. H. (Lindsey, Gainsbro)
Hudson, R. S. (Cumberl'nd, Whiteh'n)
Samuel, A. M. (Surrey, Farnham)


Culverwell, C. T. (Bristol, West)
Hume, Sir G. H
Samuel, Samuel (W'dsworth, Putney)


Curzon, Captain Viscount
Illffe, Sir Edward M.
Sandeman, N. Stewart


Dalkeith, Earl of
Inskip, Sir Thomas Walker H.
Savery, S. S.


Davidson, Rt. Hon. J. (Hertford)
Jackson, Sir H. (Wandsworth, Cen'l)
Scott, Rt. Hon. Sir Leslie


Davidson, Major-General Sir J. H.
Jephcott, A. R.
Shepperson, E. W.


Davies, Maj. Geo. F. (Somerset, Yeovil)
Kennedy, A. R. (Preston).
Skelton, A. N.


Davies, Sir Thomas (Cirencester)
King, Commodore Henry Douglas
Smith, R. W. (Aberd'n & K'nc'dine.C.)


Davies, Dr. Vernon
Kinloch-Cooke, Sir Clement
Smithers, Waldron


Davison, Sir W. H. (Kensington, S.)
Lane Fox, Col. Rt. Hon. George R.
Spender-Clay, Colonel H.

Oxford (Captain Bourne) and myself. We ought not to leave the matter as it stands. We ought to have some assurance that before the Report stage they will consider the matter.

Question put.

The Committee divided: Ayes, 228; Noes, 129.

Sprot, Sir Alexander
Thomson, F. C. (Aberdeen, South)
Wayland, Sir William A.


Stanley, Lieut.-Colonel Rt. Hon. G. F.
Thomson, Rt. Hon. Sir W. Mitchell.
Wells, S. R.


Stanley, Hon. O. F. G. (Western'eland)
Tinne, J. A.
White, Lieut.-Colonel G. Dairymple


Streatfeild, Captain S. R.
Titchfield, Major the Marquess of
Williams, Com. C. (Devon, Torquay)


Stuart, Hon. J. (Moray and Nairn)
Tryon, Rt. Hon. George Clement
Withers, John James


Styles, Captain H. Walter
Waddington, R.
Womersley, W. J.


Sugden, Sir Wilfrid
Ward, Lt.-Col. A. L. (Kingston on-Hull)
Wood, E. (Chest'r, Stalyb'dge & Hyde)


Tasker, R. Inigo
Warrender, Sir Victor



Thom, Lt.-Col. J. G. (Dumbarton)
Waterhouse, Captain Charles
TELLERS FOR THE AYES.—


Thompson, Luke (Sunderland)
Watts, Sir Thomas
Captain Bowyer and Captain




Wallace.




NOES.


Adamson, Rt. Hon. W. (Fife, West)
Griffith, F. Kingsley
Salter, Dr. Alfred


Adamson, W. M. (Staff., Cannock)
Groves, T.
Scrymgeour, E.


Alexander, A. V. (Sheffield, Hillsbro')
Grundy, T. W.
Scurr, John


Ammon, Charles George
Hall, F. (York, W. R., Normanton)
Sexton, James


Baker, J. (Wolverhampton, Bilston)
Hardle, George D.
Shaw, Rt. Hon. Thomas (Preston)


Baker, Walter
Harney, E. A.
Shepherd, Arthur Lewis


Barker, G. (Monmouth, Abertillery)
Hartshorn, Rt. Hon. Vernon
Shinwell, E.


Barnes, A.
Hayes, John Henry
Short, Alfred (Wednesbury)


Batey, Joseph
Henderson, T. (Glasgow)
Simon, Rt. Hon. Sir John


Bondfield, Margaret
Hirst, G. H.
Sinclair, Major Sir A. (Caithness)


Bowerman, Rt. Hon. Charles W.
Hirst, W. (Bradford, South)
Sitch, Charles H.


Briant, Frank
Hudson, J. H. (Huddersfield)
Slesser, Sir Henry H.


Bromfield, William
Hutchison, Sir Robert (Montrose)
Smillie, Robert


Bromley, J.
Jones, Henry Haydn (Merioneth)
Smith, Ben (Bermondsey, Rotherhithe)


Brown, Ernest (Leith)
Jones, J. J. (West Ham, Silvertown)
Smith, H. B. Lees (Keighley)


Brown, James (Ayr and Bute)
Jones, Morgan (Caerphilly)
Snell, Harry


Buchanan, G.
Jones, T. I. Mardy (Pontypridd)
Snowden, Rt. Hon. Philip


Cape, Thomas
Kelly, W. T.
Stephen, Campbell


Charleton, H. C.
Kennedy, T.
Stewart, J. (St. Rollox)


Cluse, W. S.
Kenworthy, Lt. Com. Hon. Joseph M.
Strauss, E. A.


Compton, Joseph
Kirkwood, D
Sullivan, J.


Connolly, M.
Lansbury, George
Sutton, J. E.


Cove, W. G.
Lee, F.
Thorne. G. R. (Wolverhampton, E.)


Cowan, D. M. (Scottish Universities)
Lowth, T.
Thorne, W. (West Ham, Plalstow)


Crawfurd, H. E.
Lunn, William
Thurtle, Ernest


Dalton, Hugh
Mackinder, W.
Tinker, John Joseph


Davies, Rhys John (Westhoughton)
MacLaren, Andrew
Townend, A. E.


Day, Harry
Maclean, Neil (Glasgow, Govan)
Trevelyan, Rt Hon. C. P.


Dennison, R.
Malone, C. L'Estrange (N'thampton)
Varley, Frank B.


Duckworth, John
March, S.
Viant, S. P.


Dunnico, H.
Maxton, James
Watson, W. M. (Dunfermline)


Edge, Sir William
Montague, Frederick
Watts-Morgan, Lt.-Col. D. (Rhondda)


Edwards, C. (Monmouth, Bedwellty)
Morris, R. H.
Wellock, Wilfred


England. Colonel A.
Morrison, R. C. (Tottenham, N.)
Westwood, J.


Evans, Capt. Ernest (Welsh Unlver.)
Murnin, H.
Wheatley, Rt. Hon. J.


Fenby, T. D.
Owen, Major G.
Whiteley, W.


Gardner, J. P.
Palln, John Henry
Wiggins, William Martin


Garro-Jones, Captain G. M.
Pethick-Lawrence, F. W.
Williams, T. (York, Don Valley)


Gibbins, Joseph
Potts, John S.
Wilson, R. J. (Jarrow)


Gillett, George M.
Purcell, A. A.
Wright, W.


Gosling, Harry
Richardson, R. (Houghton-le-Spring)
Young, Robert (Lancaster, Newton)


Graham, Rt. Hon. Wm. (Edin., Cent.)
Riley, Ben



Greenall, T.
Ritson, J.
TELLERS FOR THE NOES.—


Greenwood, A. (Nelson and Colne)
Saklatvala, Shapurji
Mr. Allen Parkinson and Mr. Paling.

Clauses 20 (Payment to Exchequer out of unclaimed dividends account), 21 (Interest on Victory Bonds or Funding Loan held by National Debt Commissioners not to be paid), 22 (Power to make temporary advances to Road Fund), 23 (Fines under 17 & 18 Geo 5. c. 37 to be paid into the Exchequer), 24 (Power to borrow sums required for meeting interest on savings certificates), 25 (Exemption from income tax, estate duty and stamp duties in case of trust funds and gifts for reduction of National Debt), 26 (Extension of s. 114 of Stamp Act, 1891, to stock of certain guaranteed loans), 27 (Amendment of s. 37 of 7 & 8 Geo. 5. c. 31) and 28 (Construction, short
title, application and repeal), ordered to stand part of the Bill.

Orders of the Day — POSTPONE CLAUSE 13.—(Income Tax and Super-tax for 1928–29.)

Sir J. MARRIOTT: I beg to move to leave out all the words from the word "pound" in line 19, to the end of the Sub-section.
I appreciate the kindly cheers with which hon. Members have welcomed me, and also the courtesy of the right hon. Gentleman the Chancellor of the Exchequer in agreeing to the postponement of this Clause. In moving this Amendment, may I call the attention of hon. Members—they may not have had
time to read their papers this morning—to the remarks which fell only yesterday from one of the learned Judges of the High Court. He was considering a case in the King's Bench Division, stated by the Board of Referees in respect of a Tax appeal against a direction made by the Special Commissioners under Section 21 of the Finance Act, 1922. That Section, as some hon. Members may remember, was amended by the Finance Act of 1927, and the amendment in the Finance Act last year which the learned Judge had to interpret occupies no fewer than five pages of the law books. This is what the learned Judge said:
It is a crying scandal that legislation by which the subject is taxed should appear in the Statute Book in that utterly unintelligible form. I am told by the Attorney-General—and I am rightly told, I am sure—that it is only in this form that the legislation can be got through at all. Then all I have to say is that the price of getting this legislation through is that the people of this country are taxed by laws which they cannot possibly understand.
That is really my case for the Amendment. My Amendment raises the whole question of Super-tax for the year 1928–1929, and if it was carried would strike at the root of the proposals for Surtax foreshadowed in the Finance Act last year, and actually embodied in the Finance Bill this year. This matter was discussed on the Finance Bill last year but at a most unreasonable hour, as it would have been last night but for the courtesy of my right hon. Friend, and in a very short and perfunctory way. I think I may save the time of the Committee if I begin my case for this Amendment by-quoting a short passage from the speech of the Chancellor of the Exchequer when opening the Budget last year. He was then dealing with a number of changes of the Income Tax law which are sometimes euphemistically comprehended in the blessed word "simplification." That is a word at which all Income Tax payers, perhaps all tax payers, will be well advised to look askance in the future. This is what the right hon. Gentleman said:
Last year we took an important step towards simplification. We reduced the four bases of assessment under Schedule D to the single basis of the preceding year. Now I am in a position to take several further steps. The first is the transfer of Schedule
E, which deals with salaries, to the basis of the preceding year. The second step is more important.
It is the second step with which we are concerned in this Amendment:
What we now call the Super-tax for 1926 is charged at this moment on the same basis as the Income Tax for 1925. Viewed in this light, the Super-tax is nothing more than an additional Income Tax-for the previous year. I propose that in the future Super-tax shall be assigned to the year to which it rightly belongs, that is to say, the one prior to that in which it is paid. This assignment of Super-tax"—
These are the particular words to which I want to draw attention—
to a different year does not affect cither the basis on which it is assessed, the rate at which it is charged or the date at which it falls due for payment.
That, of course, is perfectly clear and perfectly obvious. But the Chancellor of the Exchequer went on:
But, although the change is one of form rather than of fact, it makes it possible to express the Income Tax and the Super-tax in the form of a single graduated tax on income—a tax which will rise in a smooth progression and by a harmonious curve from the lowest rates."—[OFFICIAL REPORT, 11th April, 1927; col. 83, Vol. 205.]
And so on. I hope the Chancellor of the Exchequer, if he is good enough to reply, will tell us whether he adheres precisely to the statement I have just quoted. I hope he will not be tempted to take refuge in the oracular language used by the Attorney-General last year when discussing this matter. The whole question was passed over, I do not say in complete silence but with very inadequate debate last year for two or three reasons. In the first place, it was not until a very late stage in our discussions that the public outside and hon. Members inside the House began really to comprehend the precise nature of the change it was proposed to make. Some of us began by assuming when the Budget of last year was introduced that there was something like an error or mistake in the drafting of the Finance Bill, but we discovered that it was not a mistake but a grim reality which was being proposed. That was one reason why we discussed it so perfunctorily last year. Another reason was that attention was concentrated upon another aspect of Super-tax in respect of the reserves of limited companies, and the third reason was that the proposals were not to take effect until after
they had been embodied in the Finance Act of 1928. But whatever the reasons may have been the fact remains that there was very little discussion last year, and we are now face to face with these proposals in a concrete form and they are to become operative when this Finance Bill is passed.
7.0 p.m.
Most hon. Members will agree that the longer the simplification process to which the Chancellor of the Exchequer referred is contemplated the less it is liked by those in whose interest it is proposed. At first sight the proposal seemed to be acceptable, because the underlying idea was to get, as I understand, Income Tax and Super-tax into the same year for assessment. Most of us would agree that that is a very desirable object, but then came the shock which was administered to us by the Budget Resolutions of this year from which, to the lay mind, it looks as though on the income of a given year both Super-tax and Surtax would be charged, that there was in fact to be a double Super-tax, and a long correspondence which has taken place in the press and articles by the Financial Editor of the "Times" in the columns of the "Times" have shown that there is a considerable section of the public who are not even now wholly reassured on that point as to the payment of double super-tax in a single year. I hope the proposal of this Amendment will give my right hon. Friend the opportunity of finally and explicitly reasuring the taxpaying public on this point.
Nevertheless, although those extreme fears may not be justified, there is a danger to a certain class of taxpayers, or, if not to themselves, to their heirs and successors, lurking in these proposals. The proposal reduced to its simplest terms is to impose upon all persons with more than £2,000 a year an aditional year's Super-tax or Surtax, but to impose it in such a manner that the tax will become rather of the nature of an additional Death Duty than an actual addition to Super-tax. In order to make that clear and to shorten discussion at a later stage, I may remind the Committee that Super-tax was first imposed by the Finance Act, 1909, and was assessed for the first time in respect of the fiscal year 1909–10. The liability for Super-tax was
arrived at by taking as a basis the statutory income of the previous fiscal year, and that practice has been continued to this day during nearly 20 years.
Let me make this clear by an example. Liability to Super-tax for the year ending 5th April, 1927 is based on the statutory income of the previous fiscal year, ending 5th April, 1926. Let us assume an income of £10,000 a year. The Super-tax on that would be £1,131 5s. and that sum was due and payable on the 1st January, 1927, and the payment of that sum would clear the taxpayer's liability down to the ensuing 5th April, 1927. Assuming that the taxpayer died three months afterwards, on the 5th July, 1927, his sole further liability would be for the period between the 5th April, 1927, and the 5th July, 1927. That liability is established under Section 6 of the Income Tax Act, 1918. The liability would be restricted to payment of one-fourth of the year's tax, or £282 16s. 3d. That has been the position down to the present time.
Let us now take this new Surtax. How will that affect the taxpayer? I submit that the proposed change will materially affect the Super-tax payer in this way. Super-tax in respect of the fiscal year 5th April, 1929 will be assessed and payable on the 1st January, 1929, because that liability is based as at present on the statutory income of the previous year, which ended on the 5th April, 1928. After the 5th April, 1929, the name of this Super-tax will be changed to Surtax, and Surtax will be assessed on and in respect of the statutory income for the year ending 5th April, 1929, the same year, but will be payable, not on the 1st January, 1929, but on the 1st January, 1930. It will therefore be observed that the two assessments will be raised for the fiscal year ending 5th April, 1929, first of all, the assessment for Super-tax, which will become payable on the 1st January, 1929, based as at present on the statutory income of the previous year, 5th April, 1928, and also the assessment for Sur-tax, which will become payable on the 1st January, 1930. The change has the practical effect of throwing a year's liability for this tax into arrears. It may make no material difference—I frankly admit that it will make no material difference—to the Surtax payer during his life, as he will only make one payment
annually, as he does at present in respect of Super-tax; but, on his death, his estate will be liable for the year thrown back under the new method of assessment.
I can only hope to make that clear by taking an illustration. Under the Super-tax, the existing method, a taxpayer's statutory income for the fiscal year ending the 5th April, 1926, is, let us say, £10,000. He is assessed to Super-tax in respect of that amount for the following fiscal year, ending 5th April, 1927, the tax being payable on the 1st January, 1927, and amounting to £1,131 5s. Assuming that he dies on 5th October, 1927, and that his statutory income for the previous year was unaltered, then his liability for Super-tax would, as I have pointed out, be restricted to the six months between the 5th April and the date of his death, and would be £565 12s. 6d. Under the new Surtax, assuming that the taxpayer dies on the 5th October, 1928, and that his statutory income for the previous year ending 5th April, 1928, is still £10,000, he will still have his liability for Super-tax to discharge, or rather his executors will, £565 12s. 6d., but his estate will he additionally liable for Surtax in respect of the same period down to the 5th October, 1928. Whether it will be liable to the full amount of Super-tax, an additional £565 12s. 6d., as some maintain, or to some lesser sum, as others maintain, is not for the moment material to my argument. My argument is that he will be liable for a substantial additional amount.
These examples show that the practical effect of throwing the Surtax back to the year ending 5th April, 1929, is that, in respect to the estate of a deceased Super-tax payer, both Super-tax and Surtax are in operation for that one year, and that liability for a proportion of the amount of both taxes has to be met in the year ending 5th April, 1929, and that, after the 5th April, 1929, a full year's liability, in addition to a proportion of the amount, as I have already explained, will be required by the Revenue officers. What that really comes to is that an additional year's Super-tax will be thrown into the coffers of the Exchequer, or, roughly speaking, an additional £60,000,000. Not, I admit, in any one year. Nevertheless, assuming that the rate re-
mains as at present and that the aggregate income of Super-tax payers in the long run remains the same, an additional sum of £60,000,000 will, by the change effected in the Bill this year, be brought ultimately into the coffers of the Exchequer and extracted therefore from the pockets of the Super-tax payers or their representatives or executors.
What then is the sum of the whole matter? First of all, I admit frankly that the extra burdens will not be felt during the actual life of the taxpayer. But I contend that there is an additional burden, which, at current rates and on the basis of existing income, will amount in the aggregate to £60,000,000, which will sooner or later have to be provided by the general body of Super-tax payers. I realise perfectly well the dilemma in which the Chancellor of the Exchequer found himself when he was proposing his scheme of simplification. Either he had to drop a year's Super-tax altogether and be £60,000,000 out of pocket or he had to impose an additional Super-tax of that amount. I venture therefore to suggest that the equitable way of meeting the difficulty and solving his dilemma would be to allow, for a definite and limited period, the additional burden, which is thrown on the taxpayer's estate, to be deducted from Death Duties because the effect, as I have said, is an additional Death Duty. This may not be a scientific solution of the dilemma. I do not suppose that it is, but frankly I do not see how, apart from the new Clause that we shall presently propose, there can be any other solution which would at once tide over the period of transition without excessive loss to the revenue, and at the same time be equitable to the general body of Super-tax payers.

Mr. CHURCHILL: In the early hours of this morning, the Committee was torn by two opposite moods in respect to the Amendment which my hon. Friend has just proposed. On the one hand there was a great demand on this side that his Amendment and his speech should be made under the best conditions at a time when they could be fully reported and studied by the country, and on the other hand the Opposition protested that they were utterly unable to transact any further business unless they were fortified and refreshed by the guidance of my hon. Friend. As I said at the time, my
reasons for suggesting that the Clause should be postponed until this afternoon were not of a personal but of a public and general character. There has been a great deal of misconception about the Surtax and the Super-tax, and there have been absurd conjectures on the subject in some quarters. I am glad to think that my hon. Friend did not foster the more absurd and unjustifiable of these delusions.
There is no question whatever of double tax being exacted from anyone in any way. There is, of course, no question of the Exchequer obtaining in any year an additional payment of Super-tax. I think it well that it should be known that my revenue from Super-tax last year was about £60,000,000, and I am expecting to get no more than that in the present year. Consequently these alarming accounts of the Exchequer by some devious method succeeding in obtaining two payments of Super-tax in a single year are utterly unfounded, and I am glad to have an opportunity of making that plain. Although both the Super-tax and the Surtax are imposed in respect of the year 1928, yet they are payable in different years, and are calculated on the income of different years. The Super-tax for 1928 is charged upon the income for 1027, and the Surtax for 1928 is charged on the income of 1928. No one in any circumstances would ever have to pay Super-tax or Surtax for a greater number of years than he has enjoyed a Super-tax or Surtax income, and no one would ever have a liability to pay twice in the same year.
Is not that quite fair? After all, it is only applying to the Super-tax or Surtax payer what has long been the rule with regard to the ordinary Income Tax payer. No one ever questions the fact that the Income Tax payer below the Surtax limit should pay his full Income Tax for the last year of his life. I am sure that there is nothing inequitable or anomalous in the step that we have taken. Neither is there any concealment about it. It is true that our discussion took place at a late hour last year, and for that reason I was anxious that the subject should not be reached at the same time this year. But there was absolutely no concealment of the fact that this would impose an additional charge on the taxpayer. I am not pre-
tending that it does not do so. Of course it does, and is to that extent a new tax. That charge amounts to £1,000,000 a year approximately. That charge, as I explained, was put on the taxpayer as a counterpart to the remission given, I will not say to the taxpayers, but given to other taxpayers in reference to the calculation of income under Schedule E. A million pounds was lost by that, and a million pounds was gained by this. I explained both fully and plainly to the House last year that this was exactly what would occur.
I am not in a position to sacrifice revenue. The simplification scheme, which was studied with great attention by some of the highest experts of Income Tax law and procedure in this House, gained a very great measure of assent, although my hon. Friend has said that the more it was understood the less it was liked. I do not share his view. I do not know how much it will be understood, because even simplification in these matters is a relative term. But that it is a very great advance on what was in force before, and that it will gradually be found to open the door to easier processes of collection of the tax, I have no possible doubt. As I have said, I am not in a position to surrender revenue. If the House were to deny me the revenue that I obtain by this addition to the Surtax liability, amounting to £1,000,000 a year and falling to be collected after the death of the Surtax payer, and if I were left to bear the cost of the charge under Schedule E, I should be forced to propose a new addition, which I could only find in the circumstances by a regrading of the Surtax scale to produce an extra £1,000,000.
It would be much better if we adhered to the policy and the proposals which were fully laid before the House last year, and which, as is known well, were not left in any obscurity after the searching criticism by which they were beset in various quarters. I am sure it would be very much better to adhere to that method. I do not conceal for a moment that there is additional taxation. I said so last year. But I cannot surrender any revenue, and if I were denied this I should find it necessary to propose additional direct taxation. Finally, let me say that the Amendment of my hon. Friend does not remedy the evil of which
he complains. It does not take away £1,000,000 a year from the Exchequer, but it takes in one holocaust no less than £60,000,000, thus completely disorganising the whole finance of the country, and rendering it utterly impossible to carry out any constructive policy to which we set our hands.

Sir WILLIAM DAVISON: The right hon. Gentleman has said that no taxpayer would be taxed on any Super-tax income that he had not received. Is not there a change from the present system? Under the present system no Super-tax payer pays Super-tax until he has had a year of Super-tax income. That is to say, that in the first year during which he has had an income of £2,000 or over he does not pay Super-tax, but that income is the basis of taxation for Super-tax in the following year. It seems to me after what the Chancellor has said that that arrangement is now wiped out and that the Super-tax payer is to pay Super-tax backwards from the very time when he first had a Super-tax income, as contrary to the present system under which he does not pay in the first year. Let me put it in another way. If your income last year was £1,500 and this year £2,000, you do not pay Super-tax this year; you do not pay Super-tax till next year, when it is paid on the £2,000 that you have had this year.

Mr. CHURCHILL: It is no part of our case that there has been no change.

Sir ROBERT HORNE: It was last year.

Mr. CHURCHILL: On the contrary, it was not so. My right hon. Friend is in error in that statement. I said last year:
In the general scheme of simplification there are various aspects which must be considered together and balanced against each other. It happens in this particular aspect that there is a gain of revenue to the Exchequer, but in another aspect there is a counterbalancing loss. But on the whole, I contemplate, in consequence of the scheme of simplification, that the burden on taxpayers as a whole should be virtually unchanged."—[OFFICIAL REPORT, 30th June, 1927; col. 752, Vol. 208.]

Sir R. HORNE: I, in common with many other people in the House, understood it in the way I have suggested.

Mr. CHURCHILL: I also said last year, on Clause 41 of the Finance Bill, which relates to the Surtax:
I fully appreciate the fact that while in certain directions the simplification scheme meant a loss to the Exchequer, in this respect there was a gain to the revenue of an almost exactly similar amount.
Nothing could be clearer that that. It is not my case that there has been no change. There has been a change in respect of Surtax and Super-tax. An increased liability is imposed on the Super-tax payer, but that increased liability does not amount to double Super-tax, as is sometimes suggested; it does amount to the prolongation of a payer's liability for an additional year, collected after his death; it imposes a burden on him which costs in the aggregate £1,000,000 a year; but on the other hand, the revenue by other parts of the scheme is losing £1,000,000 a year, and this extra resource is necessary to us for the balancing of our finances.

Sir R. HORNE: On a point of Order. May I ask whether a decision on this Amendment—supposing that the Amendment is defeated—will in any way affect discussion upon a new Clause—(Relief to Surtax, payers)—which is to be proposed later. Will it be competent for us to discuss that new Clause if this Amendment is defeated?

The DEPUTY-CHAIRMAN (Mr. Dennis Herbert): The proposed new Clause to which the right hon. Gentleman refers will be all right, regardless of what may happen to this Amendment.

Sir HENRY BUCKINGHAM: The Committee listened with great interest to the very lucid speech of my hon. Friend the Member for York (Sir J. Marriott), and, having listened to it, I feel sure hon. Members understand all about the incidence of Surtax. I do not propose to develop any further examples of how the tax falls upon the taxpayer. The more one tries to explain the incidence of Surtax the more involved one becomes. I find myself that the only possible way of dealing with it is, with the aid of a pencil and paper, putting down the figures. If one tries to express those calculations in words, this Committee or any other body will have a very serious difficulty in understanding one's points. This matter was discussed last year, but I think few Members appreciated the
meaning of the Surtax or how its incidence would affect the taxpayer. It is true that the hon. Members for Brighton (Sir C. Rawson), Great Yarmouth (Sir F. Meyer) and Tamworth (Sir E. Iliffe) all moved Amendments or spoke upon this matter, and so we cannot suggest that we were entirely ignorant of it, when the Budget of 1927 was before us. There is no doubt, however, that since that time the public generally, and Members of Parliament in particular, have learned a great deal more about the Surtax and what it means than they knew at that time. However much the Chancellor of the Exchequer may endeavour to explain favourably the incidence of the Surtax, and, however well my hon. Friend the Member for York may state the details of it to the Committee, the fact remains, and the public know it perfectly well, that every Surtax payer, or his estate, will pay one year's more Surtax than has been payable in the past. There is not the least doubt about that fact.
The Chancellor referred to the fact that he gets £1,000,000 a year extra from the Surtax, but I should like to know how he has arrived at that figure. On the basis of last year's figures, one year's extra Surtax means at least £65,000,000, which, of course, is spread over a generation, but that does not mean simply one sum of £65,000,000 spread over a certain definite period of years. It is spread over each generation, it goes on for ever, and if we take a generation as representing 30 years, it means over £2,000,000 per annum going into the Exchequer for ever, and not one payment of £65,000,000 spread over only one period of 30 years. That being the case, I am inclined to think that the Chancellor of the Exchequer last year did not realise that hidden away in the mazes of the amazing Bill presented to us last year there was over £60,000,000 which would accrue to the Exchequer over a period of, say, 30 years. I am sure the public did not understand it, and very few Members of Parliament understood it either. If the right hon. Gentleman did realise it, then it would have been his duty, in introducing the Budget, to make reference to this huge accretion of wealth which was to be taken from the pockets of a comparatively small number of taxpayers.
It is true that, with one exception, with which I shall deal presently, no Surtax payer will pay upon more Surtax income than he has enjoyed. At the same time he will pay upon one year more of Surtax income than he is paying on at the present time in connection with Super-tax. When the Chancellor of the Exchequer attempts to justify the extra payment by attaching it to the simplification of Income Tax, he touches me, personally, on the raw, because I have always taken, a very great interest in the question of the simplification of the Income Tax. I appreciate what the Chancellor has done in many directions in that respect, but to say that it is necessary for the purpose of simplification to charge the Surtax payers of this country on an extra year's Surtax income is audacious to say the least of it, and I am sure we shall all look askance and with the greatest suspicion upon any further suggestions for simplification which the Chancellor may introduce. The right hon. Gentleman goes further and says that it is necessary, not only for purposes of simplification to impose this extra taxation, but that it is also necessary in order to reimburse him for the loss which he is to make owing to certain adjustments of assessments under Schedule E.
We have heard a great deal about this loss which is to arise from the alteration in the method of assessment under Schedule E, but to my mind that loss is very problematical. Why there should be a loss I fail to see. I do not think there will be a loss, but the Chancellor of the Exchequer tries to associate these two things, and he says he is going to have a loss owing to the different methods of assessment under Schedule E, and that he is going to gain an equal amount from the extra imposition on the Surtax payer. As I have said, the loss, on the one hand, is problematical, while, on the other hand, the accretion of revenue from the Surtax will be largely in excess of what the right hon. Gentleman imagines it will be. There is no reason why the right hon. Gentleman should associate the taxation which he is taking from the pockets of a very small number of taxpayers with a charge upon the revenue which affects an entirely different class of taxpayers. He might just as well say that if he makes a reduction in the duty on tea, it is
the Super-tax payers alone who ought to pay for it.
I do not expect pity and I do not want pity for the Surtax payers, but I wish to remind the Committee that all Sur-tax payers are not rich men. The Chancellor of the Exchequer is not in his place at the moment, but I hope the Financial Secretary will convey to him what I am about to say. I have already had the privilege of discussing this question with some of the Chancellor's advisers, and it is possible that what I am going to say may not come quite fresh to him. We all must be able to bring to mind a great many men, particularly professional men with incomes of, say, £5,000 a year, who are obliged, for various reasons connected with their professions, to spend that income to the last penny. Perhaps there comes a time early in the career of such a man, before he has had time to accumulate any sort of capital at all, when he is unexpectedly removed by death. What is the result? In such cases this extra taxation is going to fall with extreme severity upon the very people who ought to be spared. Let us take the case of a man with an income of £5,000 a year who dies leaving an estate worth £5,000. That is not at all an exceptional case. It happens many times where professional men are concerned, particularly if they are in the early stages of their careers. This extra taxation falls upon this small estate as an extra Estate Duty and the figures when one comes to face them are appalling in such an instance. Under the new Regulations such an estate would have to pay the extra year's Surtax of £231 and the Estate Duty upon an estate of £5,000 would be £200. Accordingly, the imposition of this extra year's Surtax more than doubles the Estate Duty on such a small estate.
I appeal to the Chancellor to consider cases of that kind. I confess that I am not hopeful that he is going to accept the Amendment. In fact, he has already said he will not do so, but I wish he were here to listen to the appeal which I make to him now. I admit that the Surtax payers will have to face this new tax and, to a great many of them, it does not matter very much if their estates have to pay a few hundred pounds more after they have gone than those estates would have to pay to-day. But it matters in-
tensely to the poor people to whom I am referring, who have had considerable incomes but have died leaving small estates. I do not think it is going too far to say that in such cases it will really be a persecution of the widows and children of such people, if they are called upon to pay more than double the Estate Duty to which these estates would otherwise be liable. I again express the hope that the Financial Secretary will convey my appeal to the Chancellor of the Exchequer. I know he has a soft heart for the poorer class of Income Tax payers. He proved it last year when he increased the earned income allowance, and he has proved it again this year in the larger allowances for children. I hope between now and the Report stage, he will consider whether he cannot remove this burden from the poorer class of people who will suffer very seriously from it.

Mr. WILLIAM GRAHAM: It is not often that we on this side of the Committee enjoy the somewhat debatable privilege of agreeing with the Chancellor of the Exchequer, but there is not the least doubt that, if we apply our minds impartially to the problem before us, we must conclude that the right hon. Gentleman has a perfectly sound case on this occasion. The Committee will recall that in 1919 the Royal Commission on Income Tax reported at great length on this and kindred matters and it was perfectly plain that at some time Income Tax and Super-tax in this country must be run together in some sort of continuous process. Very few of us then believed that we should ever be spectators of the kind of controversy which is proceeding in the "Times" and other newspapers—not readily to be confused with Socialist thought—during recent months. Business men of great eminence have committed themselves to the view that there is to be a double payment in this year 1928–29 or later and another section of thought has concentrated upon what is described as additional Estate Duty involved in this transition.
On the first point, much of the confusion has plainly arisen from the fact that 1928–29 is the critical year, and that on the face of the legislation you get a kind of duplication of Super-tax and Surtax, but that is a mere appearance, because, as the right hon. Gentleman had no difficulty in pointing out, the
payments are made for the last occasion under the heading Super-tax on the 1st January, 1920, and the new Surtax is in operation as regards payment on the 1st January, 1930. There is no difficulty at all upon that particular point, and certainly no question of duplication of this charge. The Chancellor of the Exchequer has not disputed, and we understood quite clearly last year, that a certain additional charge was involved in what was so far the disappearance of a kind of time lag in the operation of Super-tax in this country. Many have contended that there is some injustice or great wrong in that proposal, but if it true that you are counting back the period of years for which Super-tax or Surtax income was enjoyed, and if it is the case that no more tax is payable than is strictly related to that period of time, I fail to see where any injustice comes in.
But taking the point of the additional charge of the Chancellor of the Exchequer, even our political opponents in this country have pointed out that you cannot make a case for hardship or for any special consideration if a kind of additional Estate Duty is involved. Surtax or Super-tax papers, have no more right than any other class of the community, because they have provided by insurance against payment of Estate Duty, to plead that as against a change in the law, any more than any one of us could claim if we incurred certain losses because Income Tax was altered or any other tax was varied from time to time. That argument has been made abundantly clear in financial and other newspapers that do not in these matters share our main thought, and so, for our part, we quite fail to see that there is any valid ground for the agitation of recent months, much of which, certainly as regards the duplicated payment, has been entirely misconceived.
The hon. Member who has just addressed the Committee attacked the Chancellor of the Exchequer for confusing a scheme of simplification in Income Tax and Surtax with the precise proposals before us on the two heads which I have just tried to explain, but surely it is quite impossible to separate the two problems. Within recent years, and certainly since the time of the Report of the Royal Commission on the Income
Tax in 1919, we have been trying to address our minds to a comprehensive policy of simplification of the Income Tax and Super-tax structure, and there is no hon. Member in this House who does not agree that this is very urgently required. Whether we are achieving it or not, is another matter, with which I will deal later, but the broad features of that change have included, as hon. Members know, a very wide extension of the scope of Schedule E and a transition from an assessment of the actual year, the current year, to the preceding year. That is entirely desirable, because very great administrative and personal difficulties attended the use of the current year for the purpose of tax, and you had a large element of estimate which led to all kinds of repayments and, from many points of view, duplication of administrative effort. We have widely extended Schedule E in these recognised and regular emoluments of income, and we have added to that this change to the preceding year. That is not questioned, I take it, by any hon. Member in any part of the House. Then the next great change has been this mingling of the Super-tax and the Income Tax into one continuous process, and that does not require longer discussion now.
The third change which has been attempted, and so far applied, has been the simplification of forms that is now coming into operation, providing one form with one return and, I should have thought, making matters very much easier for the great body of taxpayers in Great Britain. But while these changes have beer proceeding, while I think the Chancellor of the Exchequer is perfectly correct in regarding them as bound up with this discussion to-night, there is a very great weakness to which I think the Committee might very well give attention on an occasion like this. The hon. Member for York (Sir J. Marriott), in introducing his case for this Amendment—which, of course, could never be pressed to a Division, because it would abolish at least £60,000,000 of income during the present year—made reference to some very strong remarks, which are quoted to-day in the "Times" and other newspapers, by Mr. Justice Rowlatt either in the course of a judgment yesterday or in the course of a case in the Courts. That reference relates to Section 21 of the
Finance Act, 1922, and Section 31 of the Finance Act, 1927, and, as the Committee will recall, the first of these Sections, and to some extent the second, was devoted to a plan for the purpose of preventing the evasion of Super-tax by a failure to distribute profits by companies on a fair basis, having regard to certain conditions which were laid down in the Act, and so to get at certain sections of people who were paying less than they should pay under the head of Super-tax.
The learned Judge quotes certain Sections of the legislation, including a Section of the Act of 1927, and repeats, in very much stronger language than any of us used on the Floor of this House, the practical impossibility of any layman and, I should add, a great portion of the experts, finding out what is meant by these Sections, or how exactly they are to be interpreted at the present time. Far be it from me to suggest that you can find an easy solution. If a personal word may be forgiven, no one could be Financial Secretary to the Treasury for even two months in this House without appreciating the very great difficulty of stating these Clauses in simple terms, or even making them clear to the House of Commons, because there is the huge Consolidation Act of 1918, and I imagine many Sections of this class have to be related to that, and unless they move in step our difficulties may be greater even than the difficulties of interpretation at present.
What is the suggestion that might be offered in this connection? I believe that there is a great body of opinion in this House, irrespective of party, which would urge the Government to proceed immediately, if they have not already tried it, to investigate the simplification of these Sections in Finance Acts in general, but more particularly as applied to Income Tax, Surtax, and other burdens. In short, is it possible to state in plain, clear, simple language the exact liability or burden which should fall on the taxpayer? Fundamentally, the taxpayer of this country is entitled to a statement of that kind, because we ought not to tax people in terms of legislation which no ordinary mind, apart altogether from the expert mind, can understand, and I defy even experts who have spent their lives in this work to give the same
reading, or even connected readings, of certain of these Sections at the present time, to say nothing of all these rules in the great Act of 1918, which in themselves no ordinary mathematical and even philosophical power can always follow. How long is that to go on? I think we should undertake this task of simplification of terms at the earliest possible moment, and, accordingly, I should like to ask the Government to-night, in a final word on this point, whether they intend to appoint a Committee or to take other steps towards that very desirable end.

Sir R. HORNE: I should like to reinforce what has been said by the right hon. Member for Central Edinburgh (Mr. W. Graham) with regard to the necessity of a simplification of the language of our Statutes. I have not been unaccustomed during my life to giving inter-petations of Statutes, and I confess that the more one studies the finance legislation of this country the more one comes to the conclusion that not even the experts can give intelligent reasons for the opinions which they form as to the meaning of the language which has been used. I heartily sympathise with the unfortunate taxpayer who has to try to discover for himself what his obligations really are. The state of our legislation at the present time urgently calls for a remedy in this respect, and I gladly support my right hon. Friend in his suggestion that some attempt should now be made to simplify the language of the Statutes. The Chancellor of the Exchequer complained to-day of absurd interpretations which had been put upon the Clause which was added to the Finance Bill last year in connection with Surtax and Super-tax. I venture to say that he has brought a great deal of that trouble upon himself. I have no doubt that he can find passages in his speeches in which there were indications given that some new tax was being imposed, but at the same time the broad general trend of the initial speech which he made on this subject was to the effect that the change was only one of form, and not of fact.
I confess for myself that I was at that time quite unaware of what was being done and of the new tax that was being imposed, although I readily agree that some Debates did take place in this House in which cer-
tain hon. Members drew attention to the fact that, in their opinion, a new tax was being imposed. The reply of the learned Attorney-General, as I recollect it, and as it has been recounted to-day, gives very little elucidation of the subject, and I defy anybody reading his reply to say that he acknowledges that a new tax was being imposed at that time. Accordingly, although one takes it now that that was the intention, and although passages from the Chancellor's speeches may be read to indicate in an obscure way that a view of that kind was being held, I am certain that we must all acknowledge that a large part of the business community were under the impression up to recently that no such new taxation had been imposed. You have only to look at the current numbers of the financial Press to find the surprise expressed by people accustomed to studying these matters very carefully and to watch out for any new taxation that is being imposed.
8.0 p.m.
There is a clear indication there of the fact that they did not realise what was being done, but I do not propose to follow that matter further. One sees how these unfortunate incidents occur, and I do not blame anybody nor cast any reproach at anybody about it. All that I say is that it is perfectly plain that this new form of taxation is a new Death Duty. That is really what it is in essence, and while I do not say that, if it had been definitely and clearly put forward in that form, I would have been found in the House to oppose it when the Chancellor of the Exchequer had given the weight of his opinion to the necessity of its being imposed, at the same time I desire to say very specifically that one form of taxation in particular which I regard with aversion is an increase of the Death Duties, not because I have any desire to save people who leave large estates from a certain amount of sacrifice to the State, but because I believe that economically it is bad, because it takes away from the country in general those resources which are necessary for the carrying on of the enterprise of the country. The more you take by way of Death Duties, the more you reduce the form of wealth from which employment comes. I would welcome any form of taxation more than that, because
the extent of taxation by Death Duties has gone too far for the good of the State. It has gone as far as in reason it can go. With these rather inconsequent observations, I thank the hon. Member for York for the attention he has drawn to this particular Clause.

Sir JOHN SIMON: I cannot help feeling that it is one of the most difficult things imaginable to state in accurate and simple terms what is the difference between the law as it now stands and the law as it will become if the Chancellor's proposals are not amended in some sense. Turning over in my mind for the simplest way of stating it, I would suggest this, and my right hon. Friend the Attorney-General will tell me if I misstate it. Let us take a case which has been much in the public mind of late, namely, the salary of the Prime Minister, £5,000 a year. Let us suppose, in an imaginary case, that before the Prime Minister became such and received his £5,000 a year, he had been a man of comparatively small income. As I understand it at this moment, the position is this. Suppose he died in office and left, as he probably would, a very modest accumulation of wealth, there would be no further claim that could be made on his estate in respect of Super-tax, except, indeed, in respect of such portion of a year as had elapsed from the 5th of April down to the date of his death. Let us suppose that this imaginary Prime Minister died in harness on the 1st July. The result would be that, when his executor came to administer his modest affairs, he would find that all that remained to be done in the matter of Super-tax would be to pay one-quarter of what would have been the full Super-tax charge if he had lived until the following April. That is the position at this moment under the law.

Sir EDWARD ILIFFE: The taxpayer is in a better position than that, because, in assessing the tax for that year, the quarter is taken as a whole year's income, and, therefore, he would pay at a lower rate.

Sir J. SIMON: I used to be moderately familiar with this subject, and some people were good enough to hire me to explain it, but I am a decayed lawyer now. Let us see what is the contrast. Let us suppose that the changes which are pro-
posed are made in the law. What does it mean? It means that in the case of the supposed Prime Minister with a quite small income, apart from his high and responsible office, dying in harness, his executors have to pay Super-tax on the full amount of £5,000, notwithstanding that he died only a short way through the year. I am not arguing whether it is fair or not. There is a great deal to be said on both sides, but, unless I misunderstand it, that is the position. Under the law as it stands at present, when a man who is earning a Super-tax income dies, the only liability in respect of Super-tax falls upon his estate, under the words of the Act which the hon. Gentleman opposite thinks are still more favourable to the estate:
In the case of the death of an individual liable to Super-tax during any year for which Super-tax is charged, a part only of the year's Super-tax shall be payable proportionate to the part of the year which has elapsed before the date of the death.
I will not enter into the difficult point the hon. Gentleman has raised. That seems to me, in a simple illustration, how it really works out. I venture to say that there is an argument both ways, and I wish to state the argument as it appears to me on the other side. Let us suppose that this imaginary Prime Minister has been in office for throe years exactly, and has received the Prime Minister's salary of £5,000 in each year and, at the end of three completed years, he dies. As things stand under the law, this imaginary gentleman would not pay any Super-tax in the first of his three years as Prime Minister, because the Super-tax in that year, though, indeed it is charged in respect of that year, not of any previous year, is measured by inquiring what was the total income from all sources in the previous year. Consequently, my imaginary Prime Minister, being Prime Minister for three consecutive years, and then dying in office, would pay no Super-tax in the first year; in the second year he would pay Super-tax on £5,000, and in the third year Super-tax on £5,000, and, if he then dies, there would be no further liability to the revenue from his estate, subject to the Section which I have read. That may be fair, or it may Dot, but it is right to look at it from both sides.
I would respectfully make this one final observation: It is commonly said by various persons who expound this branch of the law, and, I am sorry to say, by lawyers, as well as by others, that Super-tax is a tax charged in respect of the previous years income. That is not true. It never has been true. It has never been the case that Super-tax is charged in respect of the previous year. When Super-tax was first imposed—and I was a member of the Government that imposed it—it was not retrospective taxation at all. It was charged then and there, but it was charged on a figure which was ascertained and calculated by going back into recent history, just as ordinary Income Tax was charged, in a given year and for a given year, and charged by adding together three figures which could be got in the previous years. It is, therefore, quite inaccurate to say that Super-tax is charged in respect of the income of a previous year. It is not. It is charged in respect of the income of the year of charge, and you measure that income by asking what is the income from all sources, which was originally a thing which was calculated for the purposes of rebate or exemption, and the figure which you have to work upon will be found to be a figure in the records and accounts of the previous year.
I think, therefore, that this result follows. It is undoubtedly true that the new proposal, as the Chancellor has quite frankly admitted to-day, does involve in certain cases a new charge. That seems quite undoubted. There may be instances, and I think that there are, in which the new charge is a particularly severe one. It is undoubtedly a severe thing to say to a man who, though he may have a Super-tax income, none the less is earning it in circumstances like the Prime Minister, or like a Judge: "We give you notice now that if you die at your work, fall down at your desk, or in your office, or in your Court, your widow will have another year's Super-tax to pay." The argument the other way is that, after all, there will, for the most part, be found to be this position: When Super-tax was originally imposed, though indeed it was not imposed in respect of a previous year's income, it nevertheless was calculated on a figure ascertained from a previous year, and, if you are going to lump these two
charges together, to amalgamate them in the way which the hon. Gentleman just described, in some way or other the one stream has to catch up with the other. The subject is one which I have spent a good many years in considering. I am far from claiming that I have stated it correctly, but I have done my best to state it as clearly as I can.

The ATTORNEY-GENERAL (Sir Thomas Inskip): Anyone who intervenes in this Debate must feel that he is guilty of a certain amount of temerity, unless he has the capacity which the right hon. Gentleman the Member for Spen Valley (Sir J. Simon) has to express the matters with which he has dealt with so much clarity, and, if he will allow me to say so, accuracy. I entirely accept the description which the right hon. Gentleman has given of the existing state of the law with regard to the payment of Super-tax in the case of a man who dies when his income is above the Super-tax level. The point with which my hon. Friend the Member for Tamworth (Sir E. Iliffe) interrupted the right hon. Gentleman, is one on which the new amendments to the law do act, so far as they go, favourably towards the executors of the taxpayer. The right hon. Gentleman was stating the existing practice perfectly accurately. The hon. Member for Tamworth was stating the effect of the law in the future. That is to say, that where a man has lived for six months of a new year, his executors will not pay half the duty upon the full year's income, but they will pay the duty upon the half year's income. Hon. Members will appreciate that there is a difference between paying half the tax at the rate on £10,000, and paying the whole tax upon £5,000. The latter sum is much less than the former sum. I hope that that will be a crumb of comfort which some hon. Members will consider worth noticing.
One or two facts have emerged in this Debate. One of them is that it is a misconception to say that in any particular year, or in the current year, or in the next financial year, two taxes will be collected, one by the name of Super-tax and one by the name of Surtax. I shall not be able to imitate the clarity of my right hon. Friend, but if I may attempt to indicate what is happening in this transition period, I should like to try. On 1st January, 1928, Super-tax payers
were liable to pay their Super-tax. That was a lax charged upon the year 1927–28 and based, as the right hon. Gentleman has quite accurately stated, upon the income for the preceding year. That was a payment which the Super-tax payer has already paid or has been liable to pay. On 1st January, 1929, he will similarly be liable to pay his Super-tax, which will be Super tax for the year 1928–29, and again it will be measured by the income for the preceding year. On 1st January, 1930, he will pay again a sum which, if his income has remained constant, will be precisely the same amount as he paid on 1st January, 1929, but which will now be called Surtax instead of Super-tax: that is to say, it will bear a different label and will be measured not by reference to the preceding year but by the income of the year 1928–29. It will be, in effect—and I think this will help hon. Members to get a clearer conception of what the Surtax is—merely a deferred instalment of the Income Tax for which the taxpayer is liable whose income is above a certain level.

Sir HENRY CAUTLEY: You said 1928–29. Should it not be 1929–30?

Mr. W. GRAHAM: May I respectfully suggest to the Attorney-General that, unless I am wrong, he is a year out on the figures he has quoted to the Committee?

The ATTORNEY-GENERAL: I think not, unless I have unintentionally misquoted them. Let me give them again. In respect of the year 1927–28 the Super-tax payer is liable to pay his tax on 1st January, 1928. That is right. [Interruption.] Yes, I am right. That is the year for which it is charged and he is liable to pay his Super-tax on 1st January, 1928. The basis or the measure of the charge is the income for the year 1926–27, the preceding year. Similarly, on 1st January, l929, the year for which he will be paying his Super-tax is the year 1928–29, but the measure of the tax for which he will be liable on 1st January, 1929, is the income of the preceding year, the year ending 5th April, 1928.

Mr. W. GRAHAM: The Attorney-General has; described 1st January, 1929, as the last year on which Super-tax will be claimed.

The ATTORNEY-GENERAL: The right hon. Gentleman is perfectly right. It is the last year of the Super-tax, the last date on which Super-tax will be payable. What I want to point out to the Committee is that on 1st January, 1929, there will be not two taxes payable, one for Super-tax, calculated or measured by the income of the preceding year, and one for Surtax, measured by the income of the current year, but there will be a payment of Super-tax in a way with which we have all been familiar based upon the preceding year. When you get to the 1st January, 1930, the year for which the tax is charged is, it is quite true, the same year, 1928–29, but, in fact, it is measured by the same year's income, namely, 1928–29. You get, therefore, in form, an apparent charge of Super-tax and Surtax on the same year—you get it in form, but it is in appearance only, because in fact one payment falls to be made on 1st January, 1929, and the next payment falls to be made on 1st January, 1930. When you have passed this transition year, that will be the last year in which the two taxes appear to be charged; but there is no 1st of January upon which two taxes have to be paid. It is only one tax in each of those two years, one in 1929 and one in 1930, and from 1930 onwards the payment will be called Surtax and it will be, in fact, a deferred portion of the Income Tax, payable at the appropriate rates, and in this year's Finance Bill at the rate stated in the portion of the Section which the hon. Member for York (Sir J. Marriott) desires by his Amendment to omit.
As I said, I was afraid I should not rival the clarity of the right hon. Gentleman the Member for Spen Valley, but I am sure I have stated accurately the facts as to the dates when the payments fall to be made and the years for which the payments are charged, and everybody may be quite certain that there will not be two payments on next 1st January or on the 1st January, 1930, but only one payment on each 1st January. The great advantage, as I think everybody will admit, which the change has secured, is that instead of everybody having to make two returns of his income, one for Income Tax and one for Super-tax, these returns having to take into consideration different measures of income, one for the current
year and the one for the preceding year, in future everybody who has to make a return and whose income is above the Super-tax level, will make only one return in which the measure of the income will be one and the same. The liability to pay will be in two parts. There will be on one 1st January the liability to pay his Income Tax, and there will be the liability to pay the deferred portion of the Income Tax, in the name of Surtax, on the succeeding 1st January.
It is that fact which makes for justice in charging a man with so many years of Surtax as there are years for which his income is above the Surtax level. There is no justification for making an Income Tax payer pay Income Tax for every year for which he has an income upon which tax is leviable and letting off to the extent of one year a man whose income is above the Super-tax level. Take the case of the imaginary Prime Minister who has an income of £5,000 a year for three years. He has to pay Income Tax upon £5,000 for three years. When you are regarding the Surtax as merely the deferred portion of the Income Tax chargeable upon the £5,000, is it just to say that he should only pay Surtax upon two years' in come out of the three years? The man whose income is below Super-tax or Surtax level, below £2,000, pays his Income Tax on three years. We have already enacted that, similarly, the man whose Income Tax is at a higher rate, because his income is above a certain level, shall pay his whole Income Tax, whether he pays it in one or two parts, for the same number of years as the years for which he enjoys the income which is liable to Income Tax, part of which we call Surtax. That is the result of the legislation of 1927.
My right hon. Friend the Member for Hillhead (Sir R. Home) says that a great many of us did not appreciate the effect of what was done in that year. I should very much doubt whether in relation to most of our Finance Bills the public become aware of exactly what is done until some great debate has taken place, or some notable litigation has called the attention of the business public to the facts of the situation. At any rate, what we are doing now is a step in the direction of the simplification of the Income Tax returns. The only ques-
tion which has been raised is whether we are right in saying that in the future the Surtax payers shall pay the Surtax on every one of the years for which they have been drawing Surtax incomes.
I do not think it would be respectful to the Committee to leave the matter referred to by the right hon. Gentleman the Member for Central Edinburgh (Mr. W. Graham) unmentioned. No doubt the learned judge to whom he referred made remarks which will find an echo in every heart with regard to the perplexity of Income Tax legislation. I am sure the right hon. Gentleman will be the first to admit that this is not the sin of any particular Government or of any particular party. I have been looking at the Finance Act of 1924, and I find there the same ingenious legislation. All this perplexity is due to the fact that you cannot take a Section or a group of Sections of the Finance Act and repeal them and re-enact them from start to finish with the new Amendments in them. That would give facilities for proposing Amendments which would probably make the passage of the Bill impossible. These perplexities are due to the exigencies of Parliamentary time which compel us to adopt expedients which are bound to cause difficulties in all our Finance Bills. I am informed that a Committee is sitting to consider the drafting of Finance Bills, and if any hon. Member feels that he can make suggestions which would be of assistance to the Chancellor of the Exchequer, I am sure such suggestions would be welcome. We all desire that the result of our deliberations shall be as simple as possible, having for their object the benefit of the public, and the benefit of all who are taxpaying members of the community.

Question, "That the words proposed to be left out to the word 'rates' in page 9, line 21, stand part of the Clause," put, and agreed to.

Mr. E. C. GRENFELL: I beg to move, in page 9, line 19, to leave out the word "and" and to insert instead thereof "(b)."
On the last Amendment, we have had the views expressed of two Attorneys-General, two Financial Secretaries to the Treasury, and an ex-Chancellor of the Exchequer, but nevertheless I think it is wise at this juncture to clear up one
or two points. It has been suggested that in this Clause there might be some misunderstanding and that after charging the standard rate of 4s. there might be a charge of 4s. 9d. up to the maximum of 10s. I think in view of what was said by the learned judge yesterday, it would be well to have that point cleared up. My Amendment will have the effect of splitting up the first paragraph into two divisions (a) and (b).

The CHAIRMAN: I am afraid that is not possible because in the Amendment which we have just disposed of we have passed the point at which that could be done, and really the question of the letters in parentheses is not within the competence of the Committee and will be dealt with by the printer.

Mr. GRENFELL: I beg to move, in page 9, line 21, after the word "following" to insert the word "higher."
I understand that the Government are willing to accept my Amendment which will make the point clear and tend to prevent litigation in the future.

Mr. CHURCHILL: Parliamentary counsel advised us that the Clause already safeguards the important considerations which the mover of this Amendment has in mind. On the other hand, I wish to say that we are quite ready to accept the Amendment which he proposes to insert in a modified form.

Amendment agreed to.

Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."

Sir BASIL PETO: The Committee will realise the importance of this Clause when I point out that, according to the White Paper which was issued to the House when the Budget was introduced, it produced in the year which has just elapsed no less a sum than £260,500,000 in respect of the Income Tax, and £60,500,000 in respect of the Super-tax, making together £311,000,000, which represents 37 per cent. of the £843,000,000 which is the amount of the full revenue for the year. Under these circumstances it is quite legitimate to discuss this Clause though not at any inordinate length.
Any menace to the yield of the Income Tax is bound to have the very serious consideration of the Chancellor of the Exchequer. The question whether the vast growth of co-operative trading in this country does menace the annual yield of the Income Tax, which is really the main prop of the finance of this country, was raised last year by my hon. Friend the Member for Tamworth (Sir E. Iliffe) and other Members. My hon. Friend raised it on its broadest basis, but the reply of the Chancellor of the Exchequer on that occasion was, I think I am right in saying, confined exclusively, and without any qualification at all, to the comparatively small question of whether there is, and if so to what extent, a loss of revenue which could be collected under the existing Income Tax law in respect of the trade done by the co-operative societies.
I would like to deal with that smaller question first, because the reply of the Chancellor of the Exchequer last year was almost confined to figures worked out by the Treasury, and it purported to show that, even on the most extreme interpretation of the existing law, there was no greater loss of revenue than £100,000 in any of the years that he was considering, and that to collect that revenue of £100,000 would cost an extra £250,000. Those figures have been challenged, and I think I am entitled, on this smaller point, to point out to the Chancellor of the Exchequer and the Committee why I disagree altogether with that estimate.
The Treasury figures, which he said showed this small difference of £100,000, were arrived at by taking the result of the trade of the co-operative societies for the four preceding years, 1922–25. I would ask, why four years? Before the three years' average was done away with, the three preceding years were the basis of calculation of the tax payable on profits in all industry and private enterprise in this country. The Chancellor of the Exchequer said that his figures included the year 1922 for the reason that he thought that 1926, owing to the general strike, would prove to be a very unfavourable year for co-operative as for other trading, and so he thought it fairer to go back a year. In including the
year 1922, however, he included a year which was rather peculiar so far as cooperative trading was concerned, because it showed a positive deficit between what is called surplus and the total of dividends and interest, instead of an excess, as in the case of the three following years, of between £2,000,000 and £2,750,000. The figure that he gave to the Committee last year was also based upon an estimate of £1,000,000 reserved for depreciation, and that is an estimate which I am entitled to compare with the actual figure given in the accounts of co-operative trading, which, for the year 1925, was £1,983,000.
With regard to the anticipated bad year of 1926, I find, now that we have the accounts, that in 1926 that figure rose to £2,319,000. On the three years' average—the ordinary average for calculation of Income Tax under Schedule D—the surplus for discount and interest was £2,228,000, as against the Chancellor's figure of £1,700,000; and the Income Tax on that basis which is lost, instead of being £100,000, is £205,000. If we take the year 1925 alone, which is now, of course, the basis on which we have to calculate so far as any individual enterprise is concerned, we find that the corresponding figure, instead of being only £1,000,000, representing an Income Tax of £205,000, would be £2,000,000, and the Income Tax on that would be over £400,000. According to the accounts of the co-operative societies for 1926, the surplus for that year, which the Chancellor of the Exchequer anticipated would be such a bad one, went up by another £1,000,000, being £23,709,000. That is what is now called the surplus, and used to be called the profit, of co-operative enterprise in the year 1926.
I thought it necessary to trouble the Committee with these detailed figures because the whole of the Chancellor's reply last year to the case made by my hon. Friend the Member for Tamworth was based on the figures to which I have referred, and was in effect that it is a mere trifle that is escaping the Treasury, and that it would cost two-and-a-half times as much to collect it. I have ventured to show, on the figures of co-operative trading as given in their accounts, that the figure is not so trifling even on that narrow basis: but that is not the case that I want to put before the Committee at all, and it is not the case to which I desire an answer from the Chan-
cellor of the Exchequer. The case that I want to put before him is that there is a gigantic and growing volume of trade, not only distributive trade but productive industry, which, if it were in the hands of private enterprise, would be producing a very large proportion of the total Income Tax which is collected by the Exchequer, and I will quote, in aid of my contention, two previous Chancellors of the Exchequer, the late Mr. Bonar Law and the present Secretary of State for Foreign Affairs. It is quite true that Mr. Bonar Law, speaking in the House of Commons on this question in 1917 the words that I am going presently to quote, was speaking in a Debate on the Excess Profits Duty, and that when the Foreign Secretary was speaking in 1920 words which I shall also quote, he was speaking in a Debate on the Corporation Profits Tax; but I maintain that the main proposition which they put forward, in words which cannot be excelled for clarity and which stand as an exposition of the problem, as I see it, which is before the Chancellor of the Exchequer, is absolutely true irrespective of what tax happened to be under discussion at the moment in the House of Commons. Mr. Bonar Law, on the 17th July, 1917—I ask the forgiveness of the Committee for these two quotations of some length, and will read only the vital parts of what was said—said this:
I believe these societies "—
that is to say, the co-operative societies—
have done a great deal of good in the country, but they are doing an exceedingly large share of the retail trade of the country, and, although they do not make profits in the ordinary sense, it comes to this, that that immense share of the trade is done without paying the share to the revenue which is borne by other traders. I think that is something that ought to be remedied."—[OFFICIAL REPORT, 17th July, 1917; col. 277, Vol. 96.]
The Foreign Secretary, speaking on 27th July, 1920, said:
I am actuated by no hostility to the movement. I grant every one of the advantages claimed, and rightly claimed, for the individuals who take part in the movement, and for the country in consequence. But the effect of the movement is to withdraw from taxation a great deal of revenue which formerly contributed a large share. It withdraws from the field of taxation, perfectly legitimately, because Parliament does not tax business transacted in that form, a great deal of business which formerly contributed a share to the revenue. It thereby casts a heavier burden on those who do
have to contribute. The greater the success of the movement the more intolerable that position becomes for everybody else, the more impossible it becomes for the revenue authorities, and the more certain it becomes that in some form or another the Co-operative Societies must contribute their share to the common necessities of the State.
Quite apart from the fact that the matters under discussion at the moment were the Excess Profits Duty in one case and the Corporation Profits Tax in the other, the proposition put forward by two previous Chancellors of the Exchequer on this grave question, this threat to the national revenue, is one that the Chancellor of the Exchequer to-day must consider, and I believe in the future he will have to find a solution of it. In the seven years between 1920 and 1926 the co-operative societies have had a trade of almost exactly £300,000,000 a year and an average profit of almost exactly £21,000,000, and in the three years between 1924 and 1926 they have increased their reserves by very nearly £2,000,000 a year. The reason I quote only three years is that the earlier years of the seven were vitiated by excursions of the Co-operative Wholesale into rubber speculation and agricultural production, on both of which enterprises enormous losses were incurred. These excursions on a gigantic scale, certainly a scale which was not required for anything in their retail trade, would not have been made if it had not been anticipated by those who controlled that branch of our industry that profits would have resulted. On the principle of mutual trading, under which they escape assessment, under Schedule "D," there is no limit, as I understand it, to the amount by which these reserves can be increased tax free and the object of the movement—it is very important always in considering these broad questions to know where they are going—has been very clearly laid down by Mr. Lander, a director of the Co-operative Wholesale Society, who said:
I make no secret of the fact that we are out absolutely to do away with the private individual in trade and production.
It is quite clear that with that handicap to private trade, which really acts—I do not say it is, but it acts—as a subsidy to co-operative trade, there is no possible reason why that ambition should not be realised, and in that connection I should like to trouble the Committee
with a quotation from the "Co-operative News" of 18th February, 1928. It is headed "Russia's Triumph. Co-operation and Private Trade."
Just as these days are not good for individual private trade in our country, neither are they flourishing days for private trade in Russia. During the last year, so we are informed, more than 64,000 private stores have been obliged to close as a result of competition on the part of co-operative stores. During the same period 8,465 new co-operative stores have been opened. The decline of private trade goes on more rapidly in the country districts than in the cities.
Hon. Members will notice the tone of jubilation in this citing of what is going on in a neighbouring great country, where co-operative enterprise is being carried on on even a larger scale and individual enterprise is even more discouraged—I grant that—than in this country.
I want to turn now to one other aspect of the question. I turn to the balance sheets, and I look to see what is the capital of the Co-operative Societies with which this great trade is carried on. It is obvious that you cannot carry on a trade of £300,000,000 a year unless there is a vast capital invested in the industry. I hope my hon. Friend opposite, if I may call him so—we have co-operated in many causes and cases together—will not think that in anything I say I am animated by any spirit of opposition to his movement. I say that perfectly genuinely. I am in favour of everything that can legitimately bring the consumer and the producer closer together and cheapen the cost of living to our people, and I see that great broad principle in the co-operative enterprise. But I am trying to point out to the Chancellor of the Exchequer what is the veal problem from the revenue point of view. Supposing their ambition as set forth by Mr. Lander were realised, how is the country going to be run? Co-operative enterprise shares with all other enterprise all the advantages of a stable Government, on which we spend vast sums every year, not only for the police, for the Army and the Navy, for all the civil expenditure, in benefits of one kind and another to better the lot of the working classes, both while they are working and after they cease to be able to work—all the expenditure, naval, military or
civil, is shared alike by every citizen be he a co-operator or be he not. I naturally ask myself where did this capital come from?

The CHAIRMAN: Surely the hon. Member is getting a little wide of the question whether the profits, if any, of these societies are to be taxed. He appears to be going into their general financial and economic position.

Sir B. PETO: Of course, I will obey your ruling, Sir, but, if you will allow me to finish the sentence I was uttering, you will see that it has a direct bearing on this question of Income Tax. The capital, according to last year's accounts, is £160,000,000, and I maintain that the whole of that capital has been accumulated—from the history of the movement it must be so—tax free. It has been collected without paying legitimately, as the Foreign Secretary said, under our present law any contribution towards the taxes of the country.

Mr. A. V. ALEXANDER: Nonsense!

Sir B. PETO: Well, that is my view, and the hon. Member can state his presently. I would like to point out that these societies are free to depreciate this capital account to any extent they like. They have not to incur the investigation which is naturally applied to any other industry and to private enterprise under Schedule D. The hon. Member for Tamworth (Sir E. Iliffe) pointed out last year that their present programme is a depreciation of 10 per cent. on the original cost of all fixed stock and appliances. Therefore, all that can be put aside without any investigation or any objection on the part of the Income Tax authorities. On that basis, on the 10 per cent. of the original cost, it is obvious that the capital as far as fixed stock and plant are concerned can be extinguished in ten years.
May I ask the Committee while on this Income Tax question to compare the position of an individual owning a distributive industry exactly similar to many all over the country in co-operative hands? The individual who wishes to set aside £20,000 in a certain year for the development of his business has to pay on that £20,000 both Income Tax and Super-tax. Before he can apply anything to the development of his busi-
ness, he has to pay a sum to the Exchequer which will leave him with only between £11,000 and £12,000 to devote to the development of his business. But if a co-operative society running an exactly similar business wishes to put aside £20,000 for the development of its enterprise, it can devote the whole of that £20,000 to that purpose. Really, competition on those lines is impossible, and cannot last long. When we consider the nature of the businesses which are carried on by the Co-operative Societies in this country I think the Committee will realise what a vast question this is. I am not going into the details of these businesses. The hon. Member for Hillsborough (Mr. A. V. Alexander) knows them far better than I do, and he knows that they cover everything from the production of soft goods and furniture to insurance, shipping and tea plantations. They include banking, contracts for bridge-building and even fire brigade stations, and, in fact, anything and everything undertaken by private enterprise.
9.0 p.m.
There is one enterprise of the Cooperative Wholesale Society in regard to this question of mutual trade under which this vast enterprise escapes its contribution under Schedule D to which I should like to refer. I am told—and I find it in a communication to the "In-come Taxpayer," which, I believe, is the organ of the Income Taxpayers' Protection Association—that the Co-operative Wholesale Society has branches in all the Colonies in West Africa—perhaps the hon. Member for Hillsborough will refer to this when he replies to me—and that these branches do exactly the same business in selling to the native and white populations goods and provisions and buying the produce from the natives as do all the private enterprises in those Colonies. Those branches compete in exactly the same trades with the African and Eastern Trading Corporation and other companies, and yet they enrol no members in those West African Colonies, and they do not do business with members in those Colonies but with the general public. I want to know whether that is the fact. If it is, it really has a very important bearing on this question of mutual trade, because the Chancellor of the Exchequer, in dealing with this question has always assumed that there is no branch of the
Co-operative enterprise which is not covered by this principle of mutuality, which was established long ago and before this problem ever arose.
The fundamental facts of the situation are these. I gave the Chancellor of the Exchequer only yesterday a list of 9 additional private enterprise shops and businesses, all of them in London, that have been taken over quite recently by one branch of the Co-operative Wholesale Society, and, in all, I have furnished him with the names of about two dozen. That number is small. They were mainly in Liverpool and in London. But all over the country the same thing is going on, and they are taking from the people who now bear the main burden of the taxation in this country, businesses which have hitherto been contributing their share to the revenue. The question that I really want to put to the Chancellor of the Exchequer is: How big has this problem got to get before it is necessary to deal with it? I do not want any suggestion of legislation particularising any kind of industry. I do not want to suggest anything which would show any animosity to the system of co-operative trading, but I feel bound on this Income Tax Clause to point out broadly to the Committee that there is a problem, that it is a growing problem and a problem of vast dimensions, and that in effect it means that the more the Co-operative enterprise grows under our existing system of taxation the greater the burden that will be thrown upon every industry, whether productive or distributive, in this country. Therefore, it is naturally to the Chancellor of the Exchequer that I must appeal, and ask him whether he has looked at the question from that point of view, and what is the answer? It is not a question of whether the sum of £100,000 or £400,000 escapes taxation now, but whether it is necessary to review the whole position in the light of the ambition of the Co-operative Societies themselves, gradually or rapidly, to absorb the whole of the trade, both distributive and productive, in this country.

Mr. CHURCHILL: No one can doubt that my hon. Friend has made a serious, temperate and substantial contribution to the discussion of this subject. The question has been raised in this House very often, and my predecessors, for the last 10 years at any rate, have been
called upon to deal with it. The hon. Member quoted what was said by the present Foreign Secretary, but whatever may have been the words used by the Foreign Secretary, no action which he took was different from that which has hitherto been maintained under the present administration. My hon. Friend dealt practically with two points—the loss of revenue which results from the spread of the co-operative movement and the undue protection of that movement, compared with the private trader. I have had prepared a Memorandum which has been circulated freely, setting out the Treasury computation of the tax that is paid in accordance with the law by the cooperative societies, compared with that which would have been paid if they had been taxed on the same basis as private traders. This paper shows that the total advantage to the co-operative societies over the ordinary trader or over the ordinary company in matters of taxation amounted in the aggregate only to £100,000 a year. Naturally, that statement was extremely disappointing to those who feel themselves under the pressure of very acute competition from the co-operative societies, and who point out the high contributions which they have to pay to the national revenue.
The Inland Revenue computation has been criticised on the ground that the average of four years puts the figure too low; that the inclusion of the thin year, 1922, vitiates the comparison, because in 1922 the societies did very badly. Since then we have had the figures for 1926, and the Chief Registrar of Friendly Societies has published them. These figures do not in any way upset the computation of £100,000 as being the difference between what the co-operative societies pay now and what they would pay if they were treated in accordance with the method by which the profits of private traders are assessed. On the contrary, the new figures show that the gain to the revenue would be slightly under £100,000 a year. I will give the figures. In 1926, the distributive trading societies, wholesale and retail, had a surplus of £22,800,000, less "divi" amounting to £17,100,000, leaving a balance of £5,700,000. From this should be deducted interest amounting to £4,000,000, leaving a net surplus after payment of dividend and interest of
£1,700,000. Add to that depreciation, which we estimate at £1,000,000, and Income Tax at £550,000, making about £1,500,000, and we arrive at a total of £3,200,000. The tax on £3,200,000 in the ordinary way would be £640,000, whereas the tax paid by the co-operative societies is estimated at £550,000. Therefore, the difference on these figures amounts to £90,000.

Mr. A. V. ALEXANDER: Does that figure include the payments of individual shareholders?

Mr. CHURCHILL: I do not think it does, but that is not an appreciable contribution. I am aware that criticism has been directed against the figure of £1,000,000 which is added for depreciation. My hon. Friend the Member for Tamworth (Sir E. Iliffe) is going to submit later that that figure is too low. He has brought forward figures from the Co-operative Year Book which show that as much as £2,000,000 should be added. We have not been able to be convinced by these figures. The £2,000,000 includes the growth of the insurance fund of the co-operative societies, which does not represent profit. However, a departmental investigation on the question of assets and depreciation is now proceeding with the object of ascertaining whether the £100,000 difference between the tax paid by the co-operative societies and that paid under similar circumstances by private traders is too low or not. That investigation is not likely to be finished before the autumn. Anyhow, I do not believe that the result of the investigation, although it may modify to some extent the details, will alter the broad general position.
What is the broad general position? It is, undoubtedly, that under the law as it stands at present, and as it has stood for many years, those enterprises which are owned by people who are below the Income Tax limit—owned by a large number of persons of whom few are liable to Income Tax—have undoubtedly an advantage, an inherent advantage, over those which are owned by people who are not below the Income Tax limit. This advantage, enjoyed with all the formidable power of massed capital on a vast scale, constitutes a formidable menace to the ordinary trader; but I do not see how you can make any greater
change in the way in which the Income Tax laws of this country are administered than if you were to invade the primary rights, the primary advantages of those who are themselves in such a small way that they are beneath the Income Tax limits. Those rights appear to be, and they are, of a primary and fundamental character, and I do not see in what way they can be altered by or impaired by any extra burden being thrown upon their possessors in respect of their interest in co-operative societies.
The fact remains that people who have not risen to a certain standard of income are immune from Income Tax and if they choose to band themselves together into societies, Parliament has long considered that their immunity was in no wise to be impaired. That is really at the bottom of the grievance, but for my part I cannot see that any Parliament would be well advised to make an inroad upon these primary immunities and liberties of the small person who has only the most restricted forms of investment open to him, and who is below the Income Tax level. There can be no doubt about the severity of the competition. On the one hand, you have these very small investors immune from the Income Tax burden, and on the other hand you have this immense machine which manifests itself so vastly in every walk of our national and economic life. They are not the only competitors which individual shopkeepers have to face. There are the great multiple shops which are spreading throughout the country and which constitute almost as serious a form of competition as the co-operative movement. My hon. Friend dwelt upon the loss to the revenue which occurs when a private establishment is purchased by a co-operative society.
There must be a certain diminution of tax when property hitherto owned by wealthy persons who are paying Income Tax on a high and progressive scale passes into the hands of a large number of persons who are below the Income Tax level altogether. That is inevitable but the loss is not as great as is supposed. The purchase price will be invested, and the tax will be paid upon the income which is produced by the purchase money. In the second place the co-operative societies pay their tax fully under Schedule A. I frankly say
that I am not prepared to advise the Committee to make any change in the working of the law. These matters have grown up slowly. They represent very serious features in our national life, and it seems to me that the inherent right and privilege of the small investor to be immune from Income Tax cannot be restricted or diminished despite the fact that this competition with individual traders has risen to very formidable dimensions. We will pursue investigations into the comparatively small point as to the amount which should be charged for depreciation, and that should be concluded by the autumn. In other respects, I am advised, and, as far as I am able to form an opinion I have come to the conclusion, that there are no grounds at present for making any change in a deeply founded and strongly buttressed system.

Mr. ALBERY: May I ask one question? Is it not the fact that the small shareholder in a limited liability company is taxed at source, while the member of the co-operative society is not?

Mr. CHURCHILL: There you enter into the field of mutuality, and if you were to attempt to tax mutual trading concerns on the same basis as you tax shareholders in a limited company, you would be undertaking a very profound alteration in the whole of our present Income Tax law.

Sir EDWARD ILIFFE: I desire to make one or two observations on the question of co-operative societies and Income Tax. I do not propose to dwell on the broad question; I dealt with the matter fully last year, and the Chancellor of the Exchequer has explained to the Committee that the estimate of £100,000 as the loss in revenue which I challenged last year is to be investigated and that in due course we shall be told the result of that investigation. I do not propose to pursue that question at all this evening. I want to say a word or two on the question of mutuality. During the Debate last year the Chancellor of the Exchequer said:
It would not be worth while to renounce the principle of mutuality and to antagonise a very large body of citizens for a comparatively small result.
I think the right hon. Gentleman overrates the difficulty with regard to this
matter. The Royal Commission on Income Tax in 1920 went into the question very fully and they reported to this effect:
We have taken the view that a registered co-operative society cannot be regarded merely as a group of individuals; it is as much a separate entity as any other body of persons.
The same question was also dealt with by Sir Josiah Stamp and Sir William McLintock in a Minority Report. They said:
Where the aggregation of individuals serving each other is very large and they are for the most part unknown to each other, commercial methods and tests must prevail, and the element of mutuality becomes less dominant and too diluted to justify alone a plea for exemption from taxation.
There is a further paragraph in the same Report to this effect:
The mutuality nexus between the individual's position as part owner of a business and his position as a purchaser is so slight and remote, and of so little significance as a practical factor, that it can be disregarded for taxation purposes in favour of a completely objective view of the business as a whole. Under such a view it is difficult to discern any difference between its activities and those of an ordinary business. The purchasers buy their goods at a certain net cost and do not fall to be objectively distinguished from other purchasers; the shareholders receive certain incomes in respect of their shares, and are not to be differently treated from other shareholders: the entity itself is charged upon its retained trading profits put to reserve, just as a company would be, without regard to the status of its shareholders. This view leads, therefore, to the position set out in the recommendations as consistent with the logic of facts in the present development of the co-operative movement.
I entirely agree with those views. I am certain that a large body of the members of co-operative societies regard their co-operative societies in the same way as they regard the ordinary shops. They desire to buy in the cheapest market and they do not necessarily buy all their goods in the co-operative shops. They may buy groceries, but not coal. They may buy bread but not milk. It is the rebate in the price which really attracts them, not the principle of mutuality. I do not suppose that many of them really know much about the aims and objects of the co-operative movement, as such. The mutuality principle to my mind as a practical factor is really non-existent.
The Chancellor of the Exchequer said something about the fear of antagonising a large section of the community in order to obtain a small addition to the revenue of the country. Antagonism should not be an obstacle in securing equity in regard to taxation, and that argument is very unlike the right hon. Gentleman because he certainly has the courage of his convictions, and I am sure that we have only to convince him that a wrong is being done to large sections of the community and we shall find that the recommendations made by the Royal Commission in their Report will be put into operation and co-operative societies taxed on exactly the same basis as ordinary traders.
It must be remembered that the opposition on the part of co-operative societies, which is quite natural, does not necessarily come from individual members of the societies. The British public do like a straight deal. As a matter of fact, very few members of the co-operative societies take an active interest in the doings of their societies. I read of a case in London only a few weeks ago in the "Co-operative News" when they were electing the office bearers of their society, and only 2 per cent. of the members took sufficient interest in the societies to record their votes.

Mr. STEPHEN: May I point out there is hardly 2 per cent. of the Conservative party in the House at the present time?

Sir E. ILIFFE: That shows they have the utmost confidence in leaving the matter to me. There is, in fact, a considerable lack of interest on the part of members of the societies, and their interest is in buying in the cheapest possible market, which is only natural. We had the other day the President of the Co-operative Congress using these words:
The apathy of the great majority of our 5,000,000 members, as reflected in their indifference to the welfare of their own societies, is a very unhealthy sign.
I do feel that if this investigation to which the Chancellor has referred does, in fact, establish that there is a considerable loss of revenue, the Government will implement the recommendations made by the Royal Commission on Income Tax and treat these co-operative societies in the same way as ordinary traders. If that is done, it will do some-
thing to refute the suggestion made by a director of the Co-operative Wholesale Society a short time ago when he said in his speech—also reported in the "Cooperative News"—
One thing is certain and that is that the Government dare not tackle the cooperative movement.
There is one other point which was raised by the Chancellor, and that is in connection with the purchase of businesses. If I understood the Chancellor aright, he said the loss of revenue to this country was not great, because the vendors received a certain purchase consideration, and they invested the purchase money and paid tax on the interest they received. I think that was the view expressed by the Chancellor, but, with all respect to my right hon. Friend, I do suggest that that view is not altogether sound. In fact, I think it was borrowed from the co-operative movement itself. If a business is purchased by a private individual or firm, the vendor is taxed on the profits of the investment of the purchase price, and the purchaser is taxed on the profits of the business. If it is not purchased by a co-operative society but by an ordinary individual, the vendor who gets the purchase money is taxed on the interest he receives from the purchase price, and the business goes on paying Income Tax just as if it were in the hands of a private trader. Whether the business is purchased by a co-operative society or by a private individual or company, the position of the vendor in each case is exactly the same, but the position of the purchaser, if the business is purchased by a private individual as compared with a co-operative society, is certainly different. If it is purchased by a private individual, the business still pays Income Tax under Schedule D, but if it is bought by a co-operative society it does not pay Income Tax under Schedule D any longer.
I suggest to the Chancellor, if his argument is really sound, that if all the businesses of the country were to change hands, the revenue would increase because, the tax on the investment would be actually added to the tax on the business. But, of course, it is absolutely unsound. If it were sound, it would be a good thing to pass some law for the compulsory sale and purchase of all the businesses in the country and our tax-
able revenue would increase very quickly indeed. It is unsound, because, after all, what would happen? One proprietor of a business would really be substituted for another. There is only one way to increase the taxable revenue, and that is either to increase the profits of the businesses of the country or to increase the dividends from investments abroad. We shall never get an increase of revenue merely through businesses changing hands. That is what I understood the Chancellor to suggest. I regret that he is not in his place, because I should have liked to hear his views in regard to that. I hope the Government will take seriously into consideration this question of fair treatment as far as traders in this country are concerned, and will at an early date decide to carry out the recommendations of the Royal Commission and treat the co-operative societies as though they were ordinary traders.

Mr. A. V. ALEXANDER: I wish to say very little to-night, because the Chancellor of the Exchequer has really made a very adequate reply on this subject. The hon Member for Barnstaple (Sir B. Peto) made a profession during the course of his speech that he had no antagonism to the co-operative movement in this country, and was anxious not to interfere with their principles. It is extraordinary that nearly the whole of his speech could have been repeated by any number of my hon. Friends on this side, almost verbatim, from the documents published by the National Traders' Defence League. As he went on, step by step, one could almost hear the voice of Mr. Robert Walker, or see the extracts from the publications of which he has been so prolific a producer. The National Traders' Defence League has for years past conducted a campaign right through the country on the basis that the co-operative movement, instead of being a steadying and stabilising influence, in the words of the right hon. Member for Hillhead (Sir R. Horne), is in fact a social menace. It is only a few weeks ago that Mr. Robert Walker and His friends placarded the whole district of Harringay on the opening of a new co-operative branch telling the public to be aware of the co-operative menace. This gentleman was one of the prime movers in the co-operative boycott in the 'nineties. For the hon. Member for Barnstaple,
however genuine he himself may be, to come along to the House and raise the question, and say that he is not antagonistic to the co-operative movement, and does not desire to interfere with its principles and then bring forward no arguments except the case put forward by Mr. Robert Walker, needs a little explanation.

Sir B. PETO: Perhaps I may ask the hon. Gentleman whom he thinks would be the proper defender of private retail trade if it were not the principal organisation of the retail traders of this country? Naturally they produce the figures.

Mr. ALEXANDER: I think it would have been better in the circumstances—though I do not desire to attribute any wrong motive to the hon. Member—if the hon. Member, if he wished to show that he felt no antagonism, had dissociated himself from the arguments of the National Traders' Defence League in this matter, which were to stop the growth of co-operation altogether, and if possible to make it go on a downward track, and to leave the general trading field entirely to the concern of private enterprise. The position put by the hon. Member for Tam-worth (Sir E. Iliffe) requires less answer, because the Chancellor has stated the case so clearly. But the hon. Member kept on saying during his speech—he said it at least three times—that what we ought to do was to adopt the recommendations of the Majority Report of the Royal Commission of 1920. It is true that the Royal Commission of 1920 in their Majority Report included such a recommendation. But the hon. Member for Tamworth did not go on to tell us what was the qualification of that recommendation. They said:
The tax paid by the societies and their members under the legal provision which governs their case does not greatly differ from that which would be payable under the ordinary Income Tax law.
So they say there would be almost no difference in the yield of revenue.

Sir E. ILIFFE: I do not think it matters very much what the difference is. I do not think there should be any difference. Co-operative societies should be treated in the same way as ordinary private traders, and there would then be much more rest amongst the shop-
keepers of the country. It would be a very desirable step for the Government to take.

Mr. ALEXANDER: But that is a very different case from the case usually put up. It is not the case that was put up by the hon. Member for Barnstaple. His opinion is that we are getting such enormous advantages from our privileged position that it is increasingly difficult for private traders to compete. I notice that he nods his head when I say that. If there is any advantage at all to the co-operative societies in their present position under the law, it must be because the private trader and because the joint stock company engaged in the distributing trade actually pass on the Income Tax in the price of their goods.
A great deal of play has been made with the growth of co-operative societies by the purchase of businesses en bloc. He said that cases of that kind mean that much trade is withdrawn from the former field of revenue for the State. In one sense that is true and in another it is not. A considerable amount of tax still remains to be paid under Schedules "A" and "B." A considerable amount of taxation will also be paid by the individual on his share interest. The hon. Member does not seem to realise that no member of a co-operative society is in a different position under the law, as regards Income Tax, from any other citizen in the State, and that after you have taken over the business of someone else into co-operative hands a good deal of what is termed "profit," paid out in share interest at the rate of 5 per cent., is taxable in the hands of the individual recipient, and that the tax is collected. In the Income Tax forms which are sent to citizens special provision is made for them to return what they have received from the cooperative societies by way of share interest. So that, first of all, when businesses are taken over there is a yield still to the State under Schedules "A" and "B," and a yield still from taxation of share interest in the hands of the individual member of a society.
There is another side to the question of revenue besides the immediate yield from Income Tax. There are two sides always to a Budget. Anyone who examines the facts knows that a gradual
change from private enterprise to cooperative ownership means that sooner or later—generally sooner—the charge upon the State in many directions is immediately reduced. Let me give an illustration. We have in the City of Sheffield two large and flourishing cooperative societies which do a business of between £2,000,000 and £3,000,000 a year. In that city in the last six years we have suffered from unprecedented depression and unemployment. We have had to come to the Government and borrow £1,000,000 for the relief of the poor, not on capital account but on current account. What would have been the position if it had not been for the existence of the co-operative societies? We have paid out in that city, in withdrawn share capital, in dividends upon purchases, in interest upon share capital, in that period, nearly £3,000,000 sterling.
Had it not been for the existence of the societies and the practice of the mutual principle, the Minister of Health and the Treasury would not have been asked to lend £1,000,000 to Sheffield, but a considerably higher sum. Indeed the whole charge upon the public, not only by way of national revenue but by way of local revenue, would have been considerably raised. There is really something in the statement made years ago by the right hon. Member for Hillhead (Sir R. Horne), who said that the practice of the cooperative movement in this country is a stabilising and steadying influence in the life of the nation. It is something which does in fact actually save the Exchequer again and again from expenditure which would otherwise be necessary.
The hon. Member for Barnstaple wanted to know whether or not we did in fact trade with non-members. There is a little depot on the Gold Coast for dealing with some of the native workers who are engaged in our enterprises out there, where we are collecting raw materials for manufacture in this country. I have not now all the information that the hon. Member seems to require, but I am quite willing to give him the information. There is no reason to hide anything. Examination after examination has proved conclusively that of the whole turnover of the co-operative movement not more than 1 per cent. is with non-members. Of course the trade with
the non-member soon ceases, because directly the non-member begins to understand the advantage of self-help and mutuality in the movement he becomes a member It is no use for anyone to talk about the apathy of members in the cooperative movement. Although we criticise our own members in order to stir up their enthusiasm, there is far less apathy amongst them than there is amongst the shareholders of joint stock companies.

Sir E. ILIFFE: How much do people have to pay to become members?

HON. MEMBERS: A shilling.

Sir E. ILIFFE: If they pay 1s. they get the rebates?

Mr. ALEXANDER: The practice differs in the different societies, according to their rules. Some societies have quite open membership and others charge a small entrance fee to cover the cost of the book of rules and things of that kind; but all entrants must have a certain amount of share capital before dividends are distributed. There is very little to be said for the hon. Member for Barnstaple on this question of apathy. We are perfectly satisfied with the statement made by the Chancellor of the Exchequer. The hon. Member for Tamworth challenged the Chancellor really to "go for" the co-operative movement and to be courageous. Let me warn the hon. Member. Let me warn him that if the Government were to do that, they would not be the first Government to suffer in such an attempt. I am putting it quite plainly. There are 10,000,000 voters inside of, or attached to the co-operative movement When the present Secretary of State for Foreign Affairs refused to remove the Corporation Profits Tax which had been placed on co-operative societies, and when the right hon. Gentleman the Member for Hillhead sought to retain that tax in 1921, the only Government of modern times with a majority as large as the present Government's were defeated on the Committee stage of their own Finance Bill. If hon. Members really want to see what will be the result of collecting the opinions of the 10,000,000 voters, inside of and attached to the cooperative movement, I invite them to try it and I am quite certain of what the result will be.

Mr. LOOKER: How many of those 10,000,000 voters belong to the Conservative party?

Sir WILLIAM PERRING: I should not have troubled to intervene had it not been for the suggestion of the hon. Member for Hillsborough (Mr. A. V. Alexander) that the political power of the cooperative movement is being used to secure something which is unjust. That is an idea which ought to be opposed. The hon. Member seemed to invite support for the co-operative movement on the ground that it is a stabilising influence in the State. That argument might be advanced with equal force in regard to limited liability companies. Limited liability companies afford opportunities to people of small means to invest their money in exactly the same way as members of the co-operative movement do when they not only pay a 1s. member-ship fee but invest their spare capital in the shares of the co-operative movement and receive dividends accordingly. The grievance of traders all over the country is that the co-operative movement bases its claim from immunity from Income Tax on the ground of mutuality. But the claim to the principle of mutuality breaks down when one investigates the business methods of the co-operative movement. Mutuality does not exist. The principle on which the co-operative movement was first founded was that the profits should be divided among the members, but that is not done.

Mr. DALTON: Who gets them?

Sir W. PERRING: If the members of the co-operative movement received all the profits, the organisation would not be able to put by every year from £1,000,000 to £1,500,000 of reserves. That is patent to anybody.

Mr. DALTON: Is not that sound finance?

Sir W. PERRING: Whether it is sound finance or not, it shows that the claim to mutuality breaks down when the financial methods of the movement are investigated. The co-operative movement if it adhered to the principles which its members preach, could easily get more capital for the extension of the movement in the same way as other businesses get capital—by an issue on the market. It gets its capital, however, by withholding from the
members a large proportion of the profits. With those profits huge reserves are formed and the co-operative societies are buying up businesses all over the country and enjoying the advantages of capital which has never paid any Income Tax and on which they do not pay any interest. They are paying high prices for businesses which no ordinary retailer can pay.

Mr. E. BROWN: On a point of Order. Is it in order for a private Member to move, "That the Question be now put"?

The DEPUTY-CHAIRMAN: An hon. Member would be in order in claiming to move the Closure, but whether if the hon. Member moved it now it would be accepted by the Chair is quite another matter.

Mr. BROWN: On the point of Order. There are many Members of the Committee who like to take part in these discussions, and who sat throughout the night, but they object to listening to discussions which, after the statement of the Chancellor of the Exchequer, are quite futile when it will be necessary to spend hours afterwards on other matters.

Sir W. PERRING: I think that observation comes with a very bad grace from the hon. Member. We are kept here night after night listening to observations which are quite irrelevant, and when a question of some importance to the shopkeepers of the country comes up, it ill befits the hon. Member to endeavour to burke discussion. I wish to say on behalf of the mass of retail traders in the country that they will continue to agitate against and to express their disapproval of the preferential treatment which is being given to the co-operative societies. This treatment is being given, primarily, on the ground that it is undesirable at this moment to irritate the members of the co-operative movement. It is done for purposes of expediency. The hon. Member who represents the cooperative societies here has thought fit to use a kind of threat to the Chancellor of the Exchequer, and has challenged him to take a course which we think would be equitable and fair. The hon. Member says: "We have 10,000,000 members who will use their power against the Government." It is absurd to suggest that all the 10,000,000 members are of the
same political school of thought as the hon. Member for Hillsborough. All over the country people make purchases from the co-operative society for reasons which are quite apart from political reasons.

Mr. ALEXANDER: They all resent unfair taxation.

Sir W. PERRING: Many members of the co-operative movement would heartily welcome a readjustment of the incidence of taxation which would result in the cooperative societies paying their fair share, because those members are Conservative in thought, and they sympathise with what is fair to the trader. It is the allurement of the bonus which appeals to a large number of people. [HON. MEMBERS: "The dividend!"] Call it what you like, it is that little sum which comes to them every month, or every quarter, which is the inducement. It has been suggested that the Income Tax on the retail trader is passed on to the consumer, but up and down this land the retailer sells just as cheaply as the cooperative movement, and there is no benefit to the consumer on that score. The idea that when the advantages of mutuality enjoyed under the co-operative system are realised, everybody is going to join the movement, is the greatest fallacy in the world, as I shall prove in a few words. If the 10,000,000 members claimed by the hon. Member spent all their weekly earnings in the co-operative stores, the profits of the co-operative movement would immediately be quadrupled. That is the strongest proof that, with all the allurements of the "divvies," the customers of the co-operative movement buy the major portion of their commodities from and distribute their spending power among the retail traders of the country.
When it is said in this House and in the country that the people are realisms; the advantage they enjoy under the cooperative movement and that ultimately all will buy in that way, it is a complete fallacy. The great mass of the people are to-day spending their money with the retail trader in preference to spending it with the co-operative movement, as will be seen by adding up the earnings or the earning power of the 10,000,000 people who are said to be members of the co-operative movement. If they spent
their total annual earnings in the movement, the movement would become so large that the Chancellor of the Exchequer would be compelled immediately to take it into consideration, because there would he a very small amount of Income Tax coming in from the retail distributors of the country. That argument dispels the whole idea that the cooperative movement are putting into the pockets of the people something that the retail traders cannot do.

Mr. CHURCHILL: I hope we may now come to a decision on this question.

Question, "That the Clause, as amended, stand part of the Bill," put, and agreed to.

Orders of the Day — POSTPONED CLAUSE 14.—(Deductions in respect of children.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Mr. DALTON: This is a very interesting and important Clause which was postponed by agreement with the Chancellor from an inconvenient hour this morning. This proposal for the increase of the allowances for the children of Income Tax payers has often been made before from the benches behind me, and my hon. Friends would be ungrateful if they did not welcome its ultimate acceptance by the right hon. Gentleman. I am very glad to see that the form in which the increase has been made has taken the shape of increasing the flat rate allowance in respect of each child, and that, the alternative proposal put forward by the Eugenics Society and others to make an increased relief in proportion to the income of the taxpayer has been rejected. It is obviously fairer and bettor to follow the course pursued here of increasing the flat rate allowance per child. We welcome this proposal among other reasons because it makes some further advance towards the ideal of the distribution of income according to need. It is evident that the real basis of this proposal is that the needs of a family, say, of five persons are greater than those of a single person.
10.0 p.m.
But there are certain questions of equity which arise. There is, in particular, the question of equity as between the Income Tax payers as a class and the large majority of the population who
are not privileged to pay Income Tax at all. The advantages given by this Clause are confined, of course, to a comparatively small minority of the population, because only that minority is above the present level of liability to Income Tax. If the Chancellor of the Exchequer will recall the calculations of the Colwyn Report upon the comparative burden of taxation on different classes of the community, he will remember the figures which show that the proportion of the smallest incomes paid in taxation is larger than the proportion of their income paid by the lower level of Income Tax payers who are getting the chief benefit from this Clause. I submit that, although we welcome this Clause, it cannot be the last word in the adjustment of the burden of taxation because the effect of this Clause upon the general distribution of the burden of taxation in this country is still further to increase the disparities between the heavy burden imposed by the food taxes and other indirect taxes on the poorest section of the community and the lighter burden imposed upon the man, with, say, £500 a year and three or four children in respect of whom allowances can be claimed.
It is clear that, if we are to reach any real equity in the general distribution of the tax burdens of the country, we must go on and add, if not in this Budget then in future Budgets, to the provisions made by this Clause certain further provisions for the reduction of indirect taxes. Or perhaps, still more daring, we must go forward and confront the possibility that we may require to give repayments from the general total of the wealth of the country to the fathers and mothers of families even though they are below the Income Tax level. That is a matter which is at present under consideration by economists and others, as to how far it is possible to bring into operation a scheme of child allowances on a national scale. Though I assume that it would not be in order to discuss that question on this Clause, yet it would be more interesting than many subjects which we, have discussed during these Debates. No party in this House is yet committed to that principle, but quite clearly this Clause is going to lead on to further extensions of that kind and to stimulate
the discussion of such wider and more daring projects. If, later on, we confront such an extension, we shall find very interesting examples of the way in which these child allowances are being paid on a wide national scale in New Zealand, in Australia, and elsewhere. Those Members of the Conservative party who take a passing interest in the British Empire will do well, in future discussions of these matters, to study what has been already done in those Australasian Dominions.

Question, "That the Clause stand part of the Bill," put, and agreed to.

Orders of the Day — NEW CLAUSE.—(Repeal of Betting Duty.)

"As from the thirty-first day of October, nineteen hundred and twenty-eight, Part II of the finance Act, 1926 (which imposes a duty on betting and on certificates required in respect of bookmakers' business and premises) shall cease to have effect."—[Mr. J. Brown.]

Brought up, and read the First time.

Mr. JAMES BROWN: I beg to move, "That the Clause be read a Second time."
This new Clause labours under none of the disadvantages of many of the questions that have been discussed tonight. It goes straight to the mark, and its object is to abolish the Betting Duty altogether. I think the Chancellor of the Exchequer ought to welcome this new Clause, because it gives him an opportunity of getting rid of what, from the very beginning, many hon. Members in this House and a great many of the inhabitants of the country saw to be a proposal which could not prosper, had no right to prosper, and, as a matter of fact, has not prospered in the country. From the moment that this duty came into force, those who were chiefly interested, the bookmakers and commission agents, began to evade the tax, and I can assure the Chancellor of the Exchequer, who knows it already, and does not need an assurance on this point, that however clever he may be in imposing taxation, they are much more clever than he is in evading it. Therefore, I think that the Government ought to welcome this new Clause, and get rid of this thing altogether. Say what you will about it, betting is a business that very few in the community care to meddle with as a profession. It is true that
many hon. Gentlemen and right hon. Gentlemen may have their little flutter when they go to the Derby or Ascot, or any other course which they may honour with their presence, but address it how you will, the business of betting as a means of livelihood is not one of which the community can be proud. The one thing that was expected from this duty has not materialised. It was expected to give so much revenue, and it has given so very much less than was expected. Not even the modest sum that the Chancellor expected to get from it has come from the duty.
I will tell the Committee what has come from the duty—a vast amount of anxiety, a considerable amount of distrust and disquiet, not to say disgust, even from the supporters of the Chancellor of the Exchequer's own party. I cannot believe that the people of the British Empire or of these islands can view with equanimity any such Duty as this. The Debate which took place in this House not long ago on a religious matter ought to prove to the right hon. Gentleman that the heart of the people in these islands is sound where morals are concerned, and I have never heard yet anyone who dared get up and say-that this was a business in which he would like to see his son engaged. None of us would care to see that, and I would advise the Chancellor that, seeing that he has not even got the wages of sin, it would be better to abolish it now when he has the opportunity, because he is bound to have many representations made to him by many of his own supporters that this is a duty in which we ought not to engage, and that we ought to get rid of it at the earliest moment. It cannot help the revenue or the morals of the country, or the industrial conditions of the country. It is bound to hurt every one of them. It is calculated to do so. Therefore, I do trust that on what ever side of the House Members may sit, they will be at one in this, that the Betting Duty is a bad duty, that it should never have been taken into consideration even to raise the few millions which the Chancellor expected of it, and that the supporters of the Government ought to advise their Chancellor to get rid of it now.

Mr. CHURCHILL: I am afraid that I am not in a position to accept the suggestion of the hon. Member for South
Ayrshire (Mr. J. Brown). It is quite true that the Betting Duty, which has been in operation for something like two years, has not yielded the full financial results to the revenue which were expected of it. It is also quite true that a great deal of evasion is undoubtedly in progress, and I think that I must admit that a good deal of discontent and unpopularity towards the Government has been excited among the bookmaking confraternity. These are the evils. On the other hand the Measure was most carefully considered by Parliament; it was supported by an overwhelming amount of public opinion in the country; and even among those who on religious grounds used the moral argument that you should not touch the unclean thing, there was a considerable under-current of opinion in favour of making the person who felt that he could indulge in betting as a practice pay something for the luxury of the excitement that he enjoyed, or hoped to enjoy. Nevertheless the revenue has been substantial. Nearly £3,000,000 a year is being gathered in. Half the yield of the duties on tea, including the chicory group, half the amount that would be required to revert to penny postage or almost the revenue derived from matches—this is the gain from a Duty which, although it causes some political disadvantage to the Government of the day, although undoubtedly it is not working as satisfactorily as we had expected, nevertheless, in no way burdens the productive energies of the nation, and in no way affects its sources of moral or material strength.
I believe that if I were to accept the new Clause, there would be a very considerable outcry, a movement of disappointment, and indeed of resentment, from a very large class of sober and solid persons throughout the country, who feel that betting ought to be made to contribute to the revenue, and now that the duty has yielded such substantial sums, ought Parliament of set purpose to repeal it merely because of the difficulties which beset the duty in the early years?
There is another reason why I am not prepared to withdraw the duty or to modify it in the present year. I do not know yet what is going to be the fate of the Racecourse Betting Bill which is now before Parliament. I have no doubt whatever that, if that Measure
becomes law, and when that Measure becomes law—and I am sure that such an institution will in any case be adopted in the course of the next few years—a very considerable reform in British racing will have been effected, and a process will have been set on foot which is bound in the course of years to reduce and eliminate that undesirable personnel which we have incubated in this country to an extent which no other country can show, which is a disgrace in many ways to our islands, and tends to vitiate the noble and national sport of horse racing, to emphasise its undesirable features, and to check the legitimate development which we might naturally expect. I do not know what will be the result of that Measure. It is now about to pass from its chequered career in the Standing Committee, and we shall soon have it upon the Floor of the House, and I must certainly see what is the position of that Measure before I could enter into a discussion of any other proposals for mitigating the Betting Duty or shifting its incidence from the turnover basis to the licence duties which are pressed upon me. Once we know that the Totalisator Bill is going to become law, the question of giving further shape to the present Betting Duty will come into the field of practical politics.
In the meanwhile it is clear to me that the immediate duty of the Customs and Excise is to pursue their efforts at detecting and punishing evasion of the duty. Evasion is going forward on a very great scale. As I have said, bookmakers who are paying their taxes are continually informing me of the evasion which is practised, but when I press for examples and for information which will enable investigations and prosecutions to take place, there is a very singular and rather sinister shrinking from furnishing accurate and detailed facts. Statements are made to Members of the House of Commons of the enormous scale and the open and flagrant manner in which evasion is being practised, but at the same time when one asks for evidence which will enable the law to be set in motion, one is met with what is virtually a complete blank and silent negation. I am told, and I believe there is a good deal of truth in it, that persons whose business is being injured because, while they are paying the tax, others are taking
their custom from them through evading the tax, and who have every incentive that business interests can give to induce them to come forward and aid the law—as other traders do when taxes are being evaded by their competitors and rivals—are deterred by physical fear, not merely by fear of trade retaliation or the opprobrium of their colleagues, from giving the information which would enable these practices to be suppressed. That, again, points to the great importance of our setting our racing system on a basis which gradually, over a period of years, will tend to put a stop to this incubation of a crowd of exceedingly undesirable citizens who are growing up at the tail of this great national sport. Therefore, so far from receding from the betting duty or advising the Committee to lend support to the new Clause which is being proposed, I urge that we should give further consideration to making this duty effective by the prevention of evasion, and that we should review the matter when, as I trust, the Totalisator Bill has become the law of the land. If that should occur I hope that I may be able to deal with the position next year, and to make proposals which will place this tax upon a basis more satisfactory to those who are chiefly concerned. But whether it is possible to devise such proposals or not, whether the inconveniences of the present system can be mitigated in any way or not, and whether the evasion which is taking place can be restricted and prevented or not, I am still of opinion that it is an exceedingly sound, practical and useful step for the Government of this country to add £3,000,000 to its revenue by taxing the luxury of betting.

Mr. CRAWFURD: The Committee has just listened to a very remarkable speech, and one which goes a long way to justify those of us who said weeks ago that the reason for the introduction of the Race-course Betting Bill was the utter failure of the Betting Duty. I wish to draw the attention of the Chancellor of the Exchequer to the sentence in his speech in which he said it was the duty of the Customs and Excise authorities to go on with the detection and punishment of evaders of taxation. I am not going to enter into a discussion of the morality of the Betting Duty. The Chancellor of the Exchequer has just told us in so
many words that when the Racecourse Betting Bill was introduced the intention was that in course of time it should supplant the Betting Duty, or in other words that when the Racecourse Betting Bill was debated on the Floor of this House it was in the mind of the Government that they should be associated with the organisation of betting and the collection of money from betting. If that fact had been more widely known during the Second Reading Debate on the Racecourse Betting Bill it would never have had a ghost of a chance of passing.
We like the Chancellor of the Exchequer because of the vast entertainment he gives us, and because of the scrupulous care which he always takes when addressing the House to give us his very best. Those of us who appreciate the right hon. Gentleman for these reasons will appreciate that his humble, contrite, penitent attitude, uttering excuse after excuse for the Betting Duty was iself the most complete condemnation of his own tax. The Chancellor of the Exchequer knows perfectly well that every forecast he has made about the Betting Duty has been falsified, and every figure which he has given has proved to be incorrect. If hon. Members who support the Government encounter unpopularity in their constituencies owing to the Betting Duty, they will have only to thank the Chancellor of the Exchequer, who, beside being very brilliant, is also very obstinate. Those hon. Members who have read the books which were written by the right hon. Gentleman about the War will remember that he was never wrong, but the most remarkable thing was that nobody else was ever right, and that has been exactly the case with the Betting Duty. The Chancellor of the Exchequer was told at the very beginning that a tax on turnover was bound to be futile and was bound to fail. The right hon. Gentleman has admitted to-night that wholesale evasion of the tax in all sorts of ways has taken place, and he says that the yield of the duty is nearly £3,000,000. Hon. Members know that the value of a tax is not only in the amount yielded but in the amount that was expected.

Mr. ROY BIRD: Just like the Land Tax.

Mr. CRAWFURD: I am not going to deny that the land taxes proved less efficient than they might have, but even if we admit to the full the implication of that interruption, namely, that the land taxes were ineffective for their purpose, is that any reason why we should go on with another ineffective tax?

Mr. BIRD: As long as you admit your error.

Mr. CRAWFURD: I am always ready to admit error. What I am longing for is to see the right hon. Gentleman admitting his error; that is what we are all waiting for. The right hon. Gentleman was told exactly what would happen in connection with this tax. It is known that evasion has been practised, and we know most of the methods by which it has been practised; but the right hon. Gentleman himself has gone a step further, because, through his own Department, he has introduced a very novel feature into the taxation of this country. As long ago as December of last year I asked the right hon. Gentleman this question:
If he is aware that ready money betting is now taking place on licensed bookmakers' premises in respect of which an entry certificate has been issued; and will he explain why duty is collected on this form of illegal betting and not upon betting through a wholly illegal business such as street betting…?
The right hon. Gentleman was not present on that occasion, but his able assistant, as he has on other occasions, deputises for him and gave me the answer provided by his Department. Then I asked a supplementary question, and I would particularly ask the right hon. Gentleman to pay attention to that supplementary question. I said:
May I ask if the authorities are endeavouring to collect the duty upon all betting, whether it takes place in a legal or an illegal form?
The answer I received was as follows:
Yes, that is so. All illegal betting, if discovered, is punished, and the Revenue tax imposed. The Finance Act provides that all betting, legal and illegal, shall he taxed, and the authorities try to enforce the law."—[OFFICIAL REPORT, 14th December, 1927; col. 2309, Vol. 211.]
The Finance Act, 1926, provides as follows:
On every bet made with a bookmaker a duty….
shall be imposed. I had that in mind when I asked that question; but the right hon. Gentleman himself, three months before that question was put, had already, through his own Department, made what I venture to say was a very novel departure in the treatment of people in this country who are taxed. He gave definite instructions that some people on whom this tax is sought to be imposed should have it collected from them, while others were to be allowed to go scot free. It seems to me to be a very remarkable thing that any Chancellor of the Exchequer, after imposing a tax in the face of great criticism, and finding that the tax was breaking down and that there was evasion, should have deliberately said to his officials that they were to give up the attempt to collect the tax from a certain set of people and concentrate upon collecting it from another set of people. I do not know whether the right hon. Gentleman or the Financial Secretary has any defence of that position, but I do think it is most important that a Committee of this House should ask for an explanation why, when consent has been given to the imposition of a tax, the fiscal authorities of the country should go back on the decision of this Committee and deliberately give instructions that no attempt is to be made to collect the tax from certain persons, while the whole of the tax is to be collected from another set of persons. If that is what the Betting Duty has reduced the Chancellor of the Exchequer to, then I think there is every reason for our supporting this proposed new Clause and voting for the abolition of the Duty.

Lieut.-Colonel SPENDER-CLAY: I agree with the last speaker in admiring the way in which the Chancellor of the Exchequer defended his tax. With long knowledge of the right hon. Gentleman, I have never heard him put forward a more reasonable argument in its defence. What I think is wrong with the tax is that it is incapable of collection. I am not here to defend the bookmaker or to say he should not be taxed. I do not have very many dealings with bookmakers, so I can speak with a certain amount of detachment. I understand that, while there is very little evasion of course betting, there is a great deal
of evasion of credit betting. I have heard on reliable authority that estimates of credit betting are from £200,000,000 a year up to £800,000,000 turnover. Tax is only collected on £90,000,000 a year. Another thing we have heard is that if the amount of taxation were divided equally up among bookmakers according to their returns, it would give to each a gross income of something like £115 a year on which to attend all the race meetings, live and keep their homes going, which is perfectly absurd. It is a wrong thing to have a tax which can be so easily evaded. It was introduced, and I supported it, as a tax on turnover. It was likened to the Entertainments Duty and the tax on patent medicines, but the whole thing is entirely different because it is a tax on debits as well as credits. A man who invests in a patent medicine business or a theatre expects to get value for his investments and he knows exactly where he is. He expects to get a profit on every seat he sells in his theatre. In this case, a bookmaker may lose £5,000, and he pays duty in addition. It does not seem to me to be exactly fair. I am not here to stand up for the bookmaker as such, but I think it is wrong, from the point of view of the country as a whole, to introduce a tax which is a premium on dishonesty.
I admired the right hon. Gentleman's defence of the tax. I listened to his pious hope, and agreed with it, that in the future there will be the totalisator, which will be made legal. It is only in that way that the general public can be defended against the depredations of bookmakers who give unfair odds. Also it would be advantageous to the Exchequer. I do feel most strongly that it is a serious thing to allow people to evade the duty on betting in the way they do. The Chancellor of the Exchequer said there were frequent prosecutions. I know that there are prosecutions. I have forgotten the number of prosecutions my right hon. Friend mentioned, but there were a considerable number every month. I should like to ask on how many occasions have licences been permanently suspended owing to the evasion which has taken place? I have never seen in the paper the announcement of any case in which the licence of the bookmaker has been permanently
suspended owing to evasion of this duty. I should have thought that when you are putting on a penalty of this kind, and when the opportunities for the evasion of the duty are so evident, the mere fact of fining a man up to, I believe, £1,600 is quite insufficient when you take into consideration the profits which can be secured owing to the evasion of the duty. I welcome the Chancellor's statement that he intends to review the position, but I think it is a blot on our method of taxation at the present moment. I cannot support this new Clause, because I feel sincerely that this tax ought not to be imposed in its present form, and that the whole method ought to be reorganised and the people taxed in a fair and an equitable manner at the earliest possible moment.

Mr. JOHNSTON: I want to say one or two words in support of the Clause which has been moved by my hon. Friend the Member for South Ayrshire (Mr. J. Brown). I make no point about the evasion of this duty. Other Members have done so. I make no point about the small sum which has been raised by the Chancellor of the Exchequer in the course of the last two years, but I would draw the attention of the Committee to the fact that the arguments used by the Chancellor of the Exchequer to-night in defence of the present position, the argument that the sum he has got is equivalent to the Match Duty—

Mr. CHURCHILL: Nearly.

Mr. JOHNSTON: —almost equivalent to the Match Duty, and about half the sum that would be required to restore the penny post, are arguments which could equally be applied to a tax upon brothels. They are arguments which could be applied to the taxation of any other unclean or immoral business in this country. It is quite true that for many years the State has cast its mantle of protection and encouragement over this business. It is quite true that the Postmaster-General provides facilities for betting telegrams, runs up special post offices to facilitate the business, but for the first time in the last two years the Chancellor of the Exchequer, apart from the Postmaster-General's Department, has deliberately—

Mr. CHURCHILL: The profits of bookmakers were subject to Income Tax before this duty was introduced.

Mr. JOHNSTON: Certainly, but two years ago, for the first time, the Chancellor of the Exchequer set out deliberately and openly, by means of a special duty upon this business, to show that the business had in it definite State recognition. Despite the fact that a very considerable proportion of the time of our magistrates and our police is taken up in prosecuting poor bookmakers, street runners and victims of one kind and another, at the same time every other newspaper placard flaunts the fact that millionaires are making profits out of the business. Besides the fact that the Postmaster-General provides facilities, the Chancellor of the Exchequer throws his mantle over the business; a business which brings ruin, degradation and misery to millions of our poor people. I agree that on moral grounds alone the State should take every possible step it can to extirpate this business of something for nothing, this business of robbery, cheatery, Sabini gangs, racecourse gangs and one thing or another. I am very sorry that the Chancellor of the Exchequer has not acceded to the plea made by the hon. Member for South Ayrshire (Mr. J. Brown) and definitely decided to withdraw this duty.

Mr. WOMERSLEY: I venture to say a word or two on behalf of the rank and file of the party to which the Chancellor of the Exchequer belongs. I do not mean merely the rank and file in this House but the rank and file outside this House. I get into as close a touch with the working men of this country as, possibly, any other hon. Member of this House. I have been up and down the country speaking on behalf of my party at by-elections, and I can assure the right hon. Gentleman that, contrary to his contention that there has been no great outcry in the country against this duty, so far as the working men are concerned there has been a great outcry against it, and I will give the reasons why. The British working man is, first and foremost, a sport. I say that in all sincerity. I believe he is a sport to the bottom of his heart, and he regards this duty as a very unsporting method of raising revenue, because it is a tax on turnover,
which is not an equitable form of taxation, and because it is making a differentiation between the working man and his little bets and the people who can afford to bet through the credit bookmaker. That is one of the great reasons why this duty is so unpopular amongst the working people. For instance, we have case after case where the working man puts his shilling on a horse and he goes to a street bookmaker or to one who is carrying on ready money business in a small shop. A raid is made on that particular shop or in the street, and the bookmaker is hauled up to the Court and also the person who is making the bet. The working men resent this very much. Can there be any wonder?
I have noticed in recent reports of cases that many magistrates are refusing to convict. To my mind, they are doing the right thing. I have been consistent in this matter. When I have had to sit as a magistrate on a betting case I have refused to adjudicate because I think it is wrong for me to fine a man for doing something which I myself may do with impunity by simply using the telephone. In regard to this ready money betting, you have this fact, that the revenue authorities are collecting this duty and are receiving, after the man has been prosecuted and fined, evidence as to how much he has been turning over and claiming their tax upon it. Can you have anything more unjust or inequitable than a system by which the State says that a man is doing wrong, for which he is fined, and then, on the other hand, taking their tax from him for doing it. That is one reason why the duty is unpopular amongst the working men of this country.
Again, the duty is easily evaded, and that has engendered in the minds of those who are honestly paying their taxes a feeling of injustice. It does not matter how many revenue officers are employed they will not be able to deal effectively with this evasion, even with the assistance of the whole police force of the country. Again, the yield of the duty has been most disappointing. When he first brought in this duty the Chancellor talked airily about £6,000,000. Then it came down to £5,000,000, to £4,000,000; and the yield last year was in the neighbourhood of £2,669,000. In view of these figures, I cannot see how the Chancellor
of the Exchequer can really feel any satisfaction as to the yield of the duty. I welcome the statement he has made that he will carefully consider, next year, I understand, a somewhat different method of receiving the revenue from this particular duty. Reputable bookmakers feel that they ought to contribute their fair share towards the upkeep of the Government and the social services of the country. They are quite prepared to do that, but they suggest that the duty should be levied upon them in a way which will remove the various injustices to which I have referred. The Chancellor in his speech said:
I have given a great deal of thought to the subject "—
that is, the Betting Duty—
and to the representations that have been made to me, and I am convinced that the new system would not yield the money which the Exchequer requires and intends to obtain. Moreover, the bookmakers are not agreed among themselves."—[OFFICIAL REPORT, 24th April, 1928; col. 838, Vol. 216.]
The suggestion made by certain of the representatives of the bookmakers was that there should be a duty on the bookmaker in the form a heavy Licence Duty rather than a tax on turnover, and it was worked out in such a way that it would bring in to the Exchequer a sum of money very little below that which has been brought in during the last financial year. I ask the Chancellor whether it is possible to evolve a duty which would be acceptable to everybody. He gave the answer yesterday during the course of the Debate to the effect that it was not possible to evolve a tax which would be acceptable to everybody who had to pay it. He quoted some Latin in support of his statement. He said:
I do not think it is possible to evolve a scheme which will suit all the bookmakers, but if you can find a scheme which you believe is indeed a sound and fair scheme then you have something you can work' upon.
Later he said that he wanted to see the result of the working of the Totalisator Bill before he dealt with the matter in any other form. May I suggest that there are certain anomalies in connection with this tax which could be dealt with almost at once? It would not mean any great loss to the Exchequer and would remove some injustices. For instance, take the case of a bookmaker having to pay tax on his turnover whether he him-
self—I am speaking now of the credit bookmaker—receives the money or not. Quite recently, as the Chancellor may know, there was a case tried in the Westminister County Court in which a firm of bookmakers sued one of their clients, who had defaulted, or rather had owed them a large sum of money, for £80 15s., which they had had themselves to pay as Excise Duty on the bets which they made with this gentleman, and which he had failed to pay when he found that he had lost. That sum represented the Betting Duty on stakes amounting to £3,131. They were not able to make their claim good and they received nothing. Thus it leaves the bookmaker between two stools. One of them points this out in a letter in which he says that, on the one hand, he must, to comply with the law, enter up every bet made, as otherwise his certificate, for which he has had to pay, is liable to forfeiture, or he may be heavily fined, or even sent to prison. Once a client is accepted, every bet must be registered, and, if a client defaults, the bookmaker is left to pay, and he gets no rebate from the Customs and Excise. I submit that that is a very unfair thing.
Take the ordinary trader. He is allowed to send his accounts to the authorities each year on which his Income Tax is computed, and legitimate bad debts are allowed as a set-off as against his profits. Would it not be a right and proper thing to allow these bad debts to be reckoned as a set-off against the amount of money which these men have to pay in tax? It might be said that it would be a very difficult way in which to deal with the matter. I submit that it would not. Just in the same way as you deal with tradesmen's bad debts, so you might deal with these bad debts, considering the fact that you have access to the bookmakers' books and know exactly the business which he has done. It would not be a difficult matter for any of the Chancellor's officials to bring out a scheme to deal with it. I do suggest that the right hon. Gentleman should consider the question of a heavier Licensing Duty in place of this tax on turnover. I agree that the country must have revenue, and that is where the difficulty comes in. If this new Clause passes, it means a loss of revenue without anything being proposed to put in its
place. If a tax in the shape of a heavy Licence Duty on the bookmaker could be put into force it would bring almost as much revenue into the Exchequer.
I think the Chancellor would be very wise to accept such a scheme as it would help him out of many difficulties. In spite of what we have heard from him this evening, I think he must really feel at the bottom of his heart that this is by no means a popular feature of the Government's programme. I say it quite honestly and squarely that I find it a most difficult thing to defend when defending the actions of the Government, because it is not an equitable tax and that is where the difficulty comes in. I am hoping to have a further assurance from the right hon. Gentleman before this vote is taken that he will seriously consider the question of bringing in a different system. Many of those who are his strong supporters are very much concerned about this, and I venture to say, if a free vote could be taken on this question, it would be in favour of the absolute abolition of this tax. I do not want to be annoying in any way to the people with whom I am proud to associate and work, but I do feel strongly because I know what the country feels about it.

Mr. SCRYMGEOUR: On the occasion of this tax being discussed, I must express my satisfaction that another representative of the City of Dundee (Mr. Johnston) has joined in the support of this new Clause. The last speaker has informed us that the country needs money. Is the Government to be driven to the limit of recognising a business in which, as has been said, the tax is evaded, and a business which is a direct incentive to wrong-doing, which inculcates immoral action, which cheats wives and families of earnings that have been hardly gained? The pursuit of such a course by the Government is evidence of a most deplorable situation. It has been said that the tax would have no appreciable effect on either the moral or material interests of the country. It that is so, the Chancellor's conception of the moral interests of the country have undergone considerable deterioration, for in the recognition of this evil of betting we are giving an incentive to a deplorable condition of affairs which leads to criminality.
11.0 p.m.
The Chancellor of the Exchequer has declared that he did not for one moment make any attempt to minimise the evil of betting, for it was a great evil, and he said it was getting worse. We are bound to recognise the truth of the situation even in this House. To-night we have heard the results of the business that has been conducted. The Chancellor is looking forward to the establishment of the totalisator, a machine-made system for dealing with ill-gotten gains. My colleague in the representation of Dundee said it would be equally appropriate to tax brothels. I remember one hon. Member opposite recognising that fact. The Chancellor was in the position of having to admit that the trouble was deepening and the best he could do, as a Member of the Government, was to say: "Here is a great national evil and the Conservative party, with all its prestige as the defender of the country's institutions, cannot meet it. We are down in the gutter." The Chancellor was in the deplorable plight of not being capable of standing up to the moral issue; he had to drift along with the party which he represented. It is a large party, but, on the right hon. Gentleman's own admission, it is a helpless party. It cannot deal with the anomalies, never mind the enormities, of this situation. We are having this matter dealt with in a manner which is grossly unjust, treating people in the poorer classes of society most unjustly in comparison with those in high positions.
The deplorable fact is that the course which is being taken concerning betting on dogs has failed miserably in regard to betting on horses. That is because you have what is called the cream of Society supporting this sort of business on the racecourse where all sorts of troubles are liable to take place, affecting the prospects of our young men. Yet we find the so-called representatives of Society patronising all this wretched pollution. We are getting Judges of the land distributing honours that no man with self-respect would like to receive. What is happening now? An hon. Member who sits on the opposite side has in anticipation the introduction of a Bill to tax lotteries and to deal with matters of that kind. Having got
encouragement from the Government, it is a case of saying: "Let us go deeper into the trouble; let us go the whole hog," and possibly the next thing will be that this helpless Government will say, "Prostitution is a great evil, but we cannot stop it; it must go on, and the best plan we can adopt is to introduce the licensing system and get some more revenue for the right hon. Gentleman the Chancellor of the Exchequer out of the degradation of human lives." You have a very sorry party, supposing you have a Government with all the majority which is at your back now, and you go into the Lobbies in support of a tax which is being derived from gross immorality. It is a proof that our country is losing its moral fibre, its religious stamina and its spiritual fervour. We are surely going down, as other nations have gone down, because we have lost the narrow path of righteousness and principle. The Government, instead of safeguarding the law, tries to make the path easier for—

Sir PHILIP RICHARDSON: On a point of Order. What have these remarks to do with the Betting Duty?

The DEPUTY-CHAIRMAN: I was listening very carefully to the hon. Member. He referred to certain other matters as illustrations.

Mr. SCRYMGEOUR: I am trying my utmost to keep to the question before the Committee. You have imposed a Betting Duty, and it is my duty to oppose it, and I should be failing in my duty if I did not do so on every occasion when such an opportunity was given. I thank the hon. Members of the Labour party for having again challenged it, and on every occasion every right thinking man and woman ought to be up and doing so in this House, and especially every lady Member of the House. Some of those who are associated with horse racing and such like business are not here, but this is where there ought to be a stand made by the womenkind in this House. The issue is one that is really a summons, a call, to every truly patriotic citizen. Although it may seem futile at present, I maintain that it is the duty of every man and woman of us to stand rigidly in opposition to every step of this kind and not only to declare against any Govern-
ment that fails in producing laws for the uplifting of mankind, but especially to condemn a Conservative Government that has abandoned all principle end stands by the forces of evil as prevalent in this country under licence. It is our bounden duty, individually and collectively, to stand up—[Interruption.] There is an hon. Member on the cross bench whom I have never heard address this House, and who never does anything but sit and laugh at others. I make that reference to him because I Have seen it done night after night for years back, and it is a pitiable spectacle. If the hon. Member is not able to stand up and face the ordeal of his colleagues in addressing the Committee, he should try to behave himself while others do so. I feel very deeply about this whole business, and I feel that the Labour movement will be doing its duty by every man, woman, and child that is involved in the imbroglio of betting and gambling to stand resolutely against it and lead the working class people to a higher standard of life than the so-called representatives of society have done.

Sir FRANK MEYER: I do not think that anybody will for a moment question the sincerity of the hon. Member for Dundee (Mr. Scrymgeour), who has just sat down, but I must say that it is the first time in my knowledge of this House that it has been imputed as a crime to any hon. Member that he smiled during attendance at these Debates. I noticed that during the hon. Member's speech, he elicited a great deal of applause from the hon. Members sitting on the benches around and behind him.

Mr. SEXTON: And justly so.

Sir F. MEYER: I should believe more thoroughly in the sincerity of those hon. Members if they would follow up their applause by putting in the forefront of their election programme that, if they came into power, in the first place all betting should be made illegal, and in the second place all horse-racing, which we know could not exist without betting, should be suppressed. When they do that, I shall believe in their real sincerity. I have troubled the House on one or two occasions on this subject before, and I do not intend to discuss the pros and cons of the Betting Duty to-night. Last year, the Chancellor, when he replied to the
Debate, accused me of bringing forward in slightly different terms the same arguments which I brought forward on a previous occasion. That was probably true, but at any rate that is not an accusation which I can bring against the Chancellor to-night, because if his speech is compared with what he said last year, and still more strongly, if it is compared with what he said when he introduced the Duty, some grave inconsistencies will be found. It will be remembered that when he introduced this Duty he brushed on one side any suggestions that we made that it would be possible to evade the Duty on any large scale. He said that every clerk in every bookmaker's office would be a potential spy for the Treasury, and that the Customs officials wore not so simple as that. We now know that everything that was then prophesied has taken place, and that the Duty is being widely evaded. Other hon. Gentlemen who preceded me have gone into that and explained why this evasion makes the Duty so vicious, and why it is wrong. Everyone must admit, whether in favour of the Duty or not, that the honest bookmaker should not be penalised by the dishonest bookmaker. That is the reason I am against the Duty. I am not against a duty on betting or the Totalisator, but I am against a duty that cannot be equal as between one citizen and another. Before the Debate is concluded, we ought to hear some reply in answer to the very remarkable charge that was brought by the hon. Member for West Walthamstow (Mr. Orawfurd). He stated that he had evidence that discrimination as between one class of bookmaker and another in the collection of the Duty was encouraged deliberately by the Treasury. We are entitled to some answer to that charge.
I have thought for a long time very seriously as to how my vote should go to-night. I am strongly opposed to the duty. I have never made any bones about it. The duty in its present form is inequitable and if the vote were on an issue that I would present to the House, I would go into the Lobby against it. If I vote to-night for hon. Gentlemen opposite, I am committed to vote with a party who have opposed this tax on entirely different grounds, on grounds which I consider unjustified. I cannot vote with a party which brings an indict-
ment against the morals of millions of their fellow subjects. I cannot vote for a party which compares what I consider a very minor evil with prostitution. I cannot vote for a party which opposes the Betting Duty on those grounds. My grounds are entirely different. I make my protest against the duty in its present form.

Mr. SEXTON: We do not want you.

Sir F. MEYER: I am perfectly certain the hon. Member does not want me, but I am equally entitled to explain why I cannot vote with his party, and offensive remarks exchanged across the Floor of the House never assist debate. I cannot join in what I conceive to be the muddled thinking of half-baked Puritanism of hon. Members opposite. I protest against the duty in its present form, and I most earnestly ask the Chancellor of the Exchequer to see before next year if he cannot put it on a basis which will not have the unfortunate effect of penalising the honest, and letting off the dishonest. For the reasons which I have as briefly as possible put before the Committee, I do not intend to vote for the tax, which I consider wrong in its present form, but I cannot vote against it, because I cannot be associated with the arguments which hon. Gentlemen opposite have put forward.

Captain ARTHUR EVANS: As one representing an industrial city which might be called upon to bear a heavier burden of taxation if the present Betting Duty were removed, I would like to add my words to those of the hon. Member who asked the Chancellor of the Exchequer not to accept the Amendment. The Chancellor has been asked to withdraw this tax on three grounds; on moral grounds, on the grounds of political expediency put forward by the hon. Member for Grimsby (Mr. Womersley), and also on the grounds of maladministration of the duty. I think it has been shown to the satisfaction of the Committee that the claim on moral considerations falls to the ground. If by relieving the betting fraternity of this duty we did away with betting altogether, there would be a lot to say for its remission, but those who oppose the duty on those grounds surely do not think that if those who bet are relieved of
this taxation altogether they will cease to bet. I think, on the contrary, that betting would increase rather than decrease. As has been pointed out by the hon. Member for Great Yarmouth (Sir F. Meyer) the Labour party are particularly inconsistent in the line they are taking on this subject. I do not remember that the Chancellor in the Labour Government said that on moral grounds he was not prepared to collect Income Tax from betting firms, and I do not remember at the last election, or any of the three elections in which I have taken part, that this question of the Betting Duty has been placed in the forefront of the Labour party's programme. As far as the question of workmen's votes are concerned, the hon. Member for Grimsby invited the Chancellor of the Exchequer to withdraw this duty because he said it was not acceptable to the vast majority of working men.

Mr. WOMERSLEY: I said in its present form.

Captain EVANS: I do not think taxation in any form is acceptable to any class of working man, whether he works with his hands or brains; but, after all, what is the alternative? Is the working man who objects to this duty prepared to pay an additional penny a pint on his beer instead of a duty on his bets? Is his wife prepared to pay an additional penny on a pound of Lea or extra taxation on other necessities of life? Because we have to realise, in view of the regrettable state of the country at the present time, that the Chancellor would be forced, whether he liked it or not, to raise this revenue of £3,000,000 in some other direction. As one who represents an industrial constituency which is bearing a burden of taxation far too heavy, I hope the Chancellor will stick to his duty instead of placing extra taxation on the shoulders of those who can ill afford to bear it. I think there was considerable force in the criticisms put forward by various hon. Members regarding the maladministration of the duty, but I do not believe that it is beyond the wit of any Government Department or the Chancellor of the Exchequer to formulate means and ways of overcoming the evasion of this duty. The right hon. Gentleman told us that he relied upon the officers of the Customs and Excise
Department to deal with evasion. I think the Chancellor of the Exchequer should seek the aid of the Secret Service of Scotland Yard whose agents are in the habit of mixing with the betting fraternity and I am sure they would find means of dealing with the matter very effectively. I think the right hon. Gentleman would be more than justified in asking for the assistance of Scotland

Division No. 216.]
AYES.
[11.23 p.m.


Adamson, Rt. Hon. W. (Fife, West)
Grundy, T. W.
Saklatvala, Shapurji


Adamson, W. M. (Staff., Cannock)
Hall, F. (York, W.R., Normanton)
Salter, Dr. Alfred


Alexander, A. V. (Sheffield, Hillsbro')
Hamilton, Sir R. (Orkney & Shetland)
Scrymgeour, E.


Ammon, Charles George
Hartshorn, Rt. Hon. Vernon
Scurr, John


Attlee, Clement Richard
Haslam, Henry C.
Sexton, James


Baker, J. (Wolverhampton, Bilston)
Hayes, John Henry
Shaw, Rt. Hon. Thomas (Preston)


Batey, Joseph
Henderson, T. (Glasgow)
Shepherd, Arthur Lewis


Bethel, A.
Hirst, G. H.
Shinwell, E.


Bowerman, Rt. Hon. Charles W.
Hirst, W. (Bradford, South)
Short, Alfred (Wednesbury)


Briant, Frank
Hudson, J. H. (Huddersfield)
Sin on, Rt. Hon. Sir John


Broad, F. A.
Hutchison, Sir Robert (Montrose)
Sitch, Charles H.


Bromfield, William
Johnston, Thomas (Dundee)
Slesser, sir Henry H.


Bromley, J.
Jones, Henry Haydn (Merioneth)
Smith, Ben (Bermondsey, Rotherhithe)


Brown, Ernest (Leith)
Jones, J. J. (West Ham. Silvertown)
Snell, Harry


Brown, James (Ayr and Bute)
Jones, Morgan (Caerphilly)
Snowden, Rt. Hon. Philip


Buchanan, G.
Jones, T. I. Mardy (Pontypridd)
Stamford, T. W.


Cape, Thomas
Kelly, W. T.
Stephen, Campbell


Charleton, H. C.
Kennedy, T.
Strauss, E. A.


Cluse, W. S.
Kenworthy, Lt.-Com. Hon. Joseph M
Sugden, Sir Wilfrid


Clynes, Rt. Hon. John R.
Kirkwood, D.
Sullivan, J.


Compton, Joseph
Lansbury, George
Sutton, J. E.


Cove, W. G.
Lawrence, Susan
Thurtle, Ernest


Cowan, D. M. (Scottish Universities)
Lawson, John James
Tinker, John Joseph


Crawfurd, H. E.
Macdonald, Sir Murdoch (Inverness)
Tomlinson, R. P.


Crooke, J. Smedley (Deritend)
Mackinder, W.
Townend, A. E.


Dalton, Hugh
Maclean, Neil (Glasgow, Govan)
Varley, Frank B.


Davies, Rhys John (Westhoughton)
March, S.
Vlant, S. P.


Dennison R.
Morrison, R. C. (Tottenham, M.)
Watson, W. M. (Dunfermline)


Duckworth, John
Murnin, H.
Watts-Morgan, Lt.-Col. D. (Rhondda)


Dunnlco, H.
Naylor, T. E.
Wellock, Wilfred


England, Colonel A.
Oakley, T.
Westwood, J.


Evans, Capt. Ernest (Welsh Univer.)
Owen, Major G.
Wheatley, Rt. Hon. J.


Fenby, T. D.
Palln, John Henry
Whiteley, W.


Forrest, W.
Paling, W.
Wiggins, William Martin


Gardner, J. P.
Parkinson, John Allen (Wigan)
Wilkinson, Ellen C.


Garro-Jonet, Captain G. M.
Pethick-Lawrence, F. W.
Williams, T. (York, Don Valley)


Gibblns, Joseph
Ponsonby, Arthur
Windsor, Walter


Gillett, George M.
Potts, John S.
Womersley, W. J.


Graham, Rt. Hon. Wm, (Edin., Cent.)
Preston, William
Wright, W.


Greenall, T.
Richardson, R. (Houghton-le-Spring)



Greene, W. P. Crawford
Rlley, Ben
TELLERS FOR THE AYES—


Greenwood, A. (Nelson and Colne)
Ritson, J.
Mr. Charles Edwards and Mr. A. Barnes.


Griffith, F. Kingsley
Roberts, Rt. Hon. F. O. (W. Bromwich)



Groves, T.
Robinson, Sir T. (Lanc., Stretford)





NOES.


Agg-Gardner, Rt. Hon. Sir James T.
Bowyer, Capt. G. E. W.
Cobb, Sir Cyril


Ainsworth, Lieut.-Col. Charles
Brass, Captain W.
Cochrane, Commander Hon. A. D.


Albery, Irving James
Brassey, Sir Leonard
Colman, N. C. D.


Alexander, E. E. (Leyton)
Bridgeman, Rt. Hon. William Clive
Cooper, A. Duff


Alexander, Sir Wm. (Glasgow, Cent'l)
Briscoe, Richard George
Couper, J. B.


Allen, Sir J. Sandeman
Brocklebank, C. E. R.
Courthope, Colonel Sir G. L.


Apsley, Lord
Broun-Lindsay, Major H.
Craig, Sir Ernest (Chester, Crewe)


Ashley. Lt.-Col. Rt. Hon. Wilfrid W.
Brown, Brig.-Gen. H.C. (Berks, Newb'y)
Crookshank, Cpt. H. (Lindsey, Gainsbro)


Balniel, Lord
Buchan, John
Culverwell, C. T. (Bristol, West)


Barclay-Harvey, C. M.
Buckingham, Sir H.
Curzon. Captain Viscount


Barnett, Major Sir Richard
Burton, Colonel H. W.
Davidson, Major-General Sir John H.


Beamish, Rear-Admiral T. P. H.
Campbell, E. T.
Davies, Maj. Geo.F. (Somersel, Yeovil)


Betterton, Henry B.
Carver. Major W. H.
Davison, Sir W. H. (Kensington, S.)


Birchall, Major J. Dearman
Cautley, Sir Henry S.
Dawson. Sir Philip


Bird, E. R. (Yorks, W. R., Skipton)
Cayzer, Sir C. (Chester, City)
Dixey, A. C.


Bird, Sir R. B. (Wolverhampton, W.)
Cecil, Rt. Hon. Sir Evelyn (Aston)
Drewe, C.


Boothby, R. J. G.
Chamberlain, Rt. Hon. N. (Ladywood)
Eden, Captain Anthony


Bourne, Captain Robert Croft
Chapman. Sir S.
Edmondson, Major A. J.


Bowater, Col. Sir T. Vanslttart
Churchill, Rt. Hon. Winston Spencer
Elliot, Major Walter E.

Yard on this question. I hope some means will be found of overcoming the evasion of the duty which falls so unequally upon the shoulders of the people concerned.

Question put, "That the Clause be read a Second time."

The Committee divided: Ayes, 128; Noes, 182.

Ellis, R. G.
Lane Fox, Col. Rt. Hon. George R.
Russell, Alexander West (Tynemouth)


Evans, Captain A. (Cardiff, South)
Lister, Cunliffe-, Rt. Hon. Sir Philip
Rye, F. G.


Everard, W. Lindsay
Looker, Herbert William
Salmon, Major I.


Fairfax, Captain J. G.
Lougher, Lewis
Samuel, A. M. (Surrey, Farnham)


Falie, Sir Bertram G.
Lucas-Tooth, Sir Hugh Vere
Samuel, Samuel (W'dsworth, Putney)


Fielden, E. B.
Luce, Maj.-Gen. Sir Richard Harman
Sandeman, N. Stewart


Foxcroft, Captain C. T.
Lumley, L. R.
Sanders, Sir Robert A.


Fraser, Captain Ian
Lynn, Sir R. J.
Sassoon, Sir Philip Albert Gustave D.


Fremantle, Lt.-Col. Francis E.
MacAndrew, Major Charles Glen
Savery, S. S.


Gadie, Lieut.-Col. Anthony
McDonnell, Colonel Hon. Angus
Shaw, R. G. (Yorks, W.R., Sowerby)


Galbraith, J. F. W.
Maclntyre, Ian
Shepperson, E. W.


Gilmour, Colonel Rt. Hon. Sir John
McLean, Major A.
Slaney, Major P. Kenyon


Goft, Sir Park
Macmillan, Captain H.
Smith-Carington, Neville W.


Gower, Sir Robert
MacRobert, Alexander M.
Smithers, Waldron


Grace, John
Makins, Brigadier-General E.
Somerville, A. A. (Windsor)


Grant, Sir J. A.
Malone, Major P. B.
Spender-Clay, Colonel H.


Grenfell. Edward C. (City of London)
Manningham-Buller, Sir Mervyn
Sprot, Sir Alexander


Grotrian, H. Brent
Margesson, Capt. D.
Stanley, Lieut.-Colonel Rt. Hon. G. F.


Guinness, Rt. Hon. Walter E.
Marriott, Sir J. A. R.
Stanley, Lord (Fylde)


Hacking, Douglas H.
Mason, Colonel Glyn K.
Streatfeild, Captain S. R.


Hammersley, S. S.
Mitchell, S. (Lanark, Lanark)
Stuart, Hon. J. (Moray and Nairn)


Hanbury, C.
Monsell, Eyres, Com. Rt. Hon. B. M.
Styles, Captain H. Walter


Hannon, Patrick Joseph Henry
Moore, Sir Newton J.
Sueter, Rear-Admiral Murray Fraser


Harland, A.
Morrison, H. (Wilts, Salisbury)
Tasker, R. Inlgo.


Harrison, G. J. C.
Nail, Colonel Sir Joseph
Thorn, Lt.-Col. J. G. (Dumbarton)


Harvey, Major S. E. (Devon, Totnes)
Neville, Sir Reginald J.
Thomson, Rt. Hon. Sir W. Mitchell.


Henderson, Capt. R. R. (Oxf'd, Henley)
Nicholson, O. (Westminster)
Tinne, J. A.


Hilton, Cecil
O'Neill, Major Rt. Hon. Hugh
Titchfield, Major the Marquess of


Hoare, Lt.-Col. Rt. Hon. Sir S. J. G.
Pennefather, Sir John
Waddington, R.


Holbrook, Sir Arthur Richard
Penny, Frederick George
Wallace, Captain D. E.


Holt, Capt. H. P.
Perkins, Colonel E. K.
Ward, Lt.-Col. A. L. (Kingston-on-Hull)


Hope, Capt. A. O. J. (Warw'k, Nun.)
Perring, Sir William George
Warner, Brigadier-General W. W.


Hopkins, J. W. W.
Peto, G. (Somerset, Frome)
Warrender, Sir Victor


Howard-Bury, Colonel C. K.
Plicher G.
Watts, Sir Thomas


Hudson, R. S. (Cumberl'nd, Whiteh'n)
Pownall, Sir Assheton
Wayland, Sir William A.


Hume, Sir G. H.
Ralne, Sir Walter
Wells, S. R.


Illffe, Sir Edward M.
Rawson, Sir Cooper
Williams, Herbert G. (Reading)


Inskip, Sir Thomas Walker H.
Reid, D. D. (County Down)
Withers. John James


Jackson, Sir H. (Wandsworth, Cen'l)
Remer, J. R.
Wolmer, Viscount


Jephcott, A. R.
Richardson, Sir P. W. (Sur'y, Ch'ts'y)



Kennedy, A. R. (Preston).
Roberts, E. H. G. (Flint)
TELLERS FOR THE NOES.—


King, Commodore Henry Douglas
Ropner, Major L.
Major Sir George Hennessy and


Kinloch-Cooke, Sir Clement
Ruggles-Brise, Lieut.-Colonel E. A.
Major Sir William Cope.

Mr. SNOWDEN: I beg to move, "That the Chairman do report Progress, and ask leave to sit again."
I move this Motion with a view to getting some indication from the right hon. Gentleman as to how far he intends to go to-night.

Mr. CHURCHILL: We have a good many new Clauses on the Paper, and they are not getting fewer as the days pass by. Most of them deal with matters which are either likely to be settled by agreement or are not likely to be settled in a way which will alter the legislation which the Committee have already practically completed. Nevertheless, they may take a considerable time to discuss. There is the question of the Brewers' Licence Duty and half-bottles, and there is a Clause in connection with the Income Tax provisions, which can easily be disposed of. I am afraid we cannot hope to be able to complete these Clauses to-night, but, on the other hand, I am doubtful whether what is left need necessarily occupy a whole additional day. Perhaps it might be a matter for discussion through the usual
channels whether we could not resume and conclude our discussions in less than a whole day. In all the circumstances I will not ask the Committee to sit to an inconvenient hour to-night. We will proceed with business for a little longer, but we will report Progress and terminate our proceedings at such an hour as will not be inconvenient to Members who live some distance away.

Mr. SNOWDEN: The right hon. Gentleman's statement is rather indefinite. My friends are not responsible for many of the New Clauses chat remain. There are three or four pages but they have been filled up by supporters of the Government and it rests with that side of the House as to the length of time to be occupied in concluding the Committee stage. The three New Clauses that stand in the name of my hon. friends need not take very long. Therefore, though I make no definite pledge—it will be a matter of arrangement—I see no reason at all why the length of time on another day than the right hon. Gentleman suggested should not be sufficient. I am making this plea for closing the
sitting now almost wholly out of consideration for the right hon. Gentleman whose health is a matter of Parliamentary and national concern. He has been undergoing a constant and rather severe strain almost continuously for the last two days. My hon. Friends are quite willing to sit all night again, but it is cut of consideration for the right hon. Gentleman, who is entitled to a long night's rest, that I make this plea.

Mr. CHURCHILL: I am obliged to the right hon. Gentleman for his solicitude but I am not making any personal appeal. We might continue our proceedings, I will not say till the extreme and extravagant hour we reached this morning but up to the small hours, but I think it would be undesirable to take that course and I will accede to his proposal and discussion will take place in the usual manner as to when the remainder of the Committee stage shall be dealt with.

Question put, and agreed to.

Committee report Progress; to sit again To-morrow.

Orders of the Day — BANKERS (NORTHERN IRELAND) BILL.

Lords Amendments considered, and agreed to.

Orders of the Day — RECONSTITUTED AND SYNTHETIC CREAM BILL.

Read a Second time.

Bill committed to a Committee of the Whole House for Friday.—[Mr. Everard.]

The remaining Orders were read, and postponed

It being after half-past Eleven of the Clock, Mr SPEAKER adjourned the House, without Question put, persuant to the Standing Order.

Adjourned at Nineteen Minutes before Twelve o'Clock.